Shareholders To Vote on Reynolds' Deal With Lorillard

Shareholders of tobacco giants Reynolds American and Lorillard will vote Wednesday on a proposed $27-billion merger. As WFDD's Paul Garber reports, the deal will reshape the market if approved.

By acquiring Lorillard, Reynolds would boost its presence in the menthol cigarette market though the Newport brand, one of country's biggest sellers. 

Reynolds is also expanding its Vuse brand of e-cigs, which the company views as a growth market in the face of declining cigarette sales. Analysts believe e-cigarettes could potentially overtake traditional cigarette sales within 10 years.  

As for Lorillard's e-cig, called Blu, Reynolds would sell that along with some of its own long-standing brands to the British Company Imperial Tobacco Group. That move would make Imperial the third-largest tobacco company in the U.S.

Should shareholders approve the deal, it still faces an antitrust review by the Federal Trade Commission.