WASHINGTON -- Following a public comment period, the Federal Trade Commission (FTC) has approved a final order settling charges that the $27.4 billion merger of tobacco companies Reynolds American Inc. and Lorillard Inc. would likely harm competition in the U.S. market for cigarettes.
The Winston-Salem, N.C.-based tobacco company acquired Lorillard, the maker of the Newport brand, for $25.9 billion in June. It has divested the KOOL, Salem, Winston, Maverick cigarette and blu eCigs brands to U.K.-based Imperial Tobacco Group's new U.S. subsidiary, ITG Brands LLC, Greensboro, N.C., for $7.1 billion.
Under the order, first announced in May 2015, the FTC required Reynolds to divest to Imperial Tobacco Group four cigarette brands: Winston, Kool, Salem and Maverick.
It also must divest the Lorillard manufacturing facilities in Greensboro, N.C., and provide Imperial Tobacco with the opportunity to hire most of the existing Lorillard management, staff and salesforce.
The order also appoints a monitor to oversee the divestiture, and it requires the newly merged Reynolds and Lorillard to furnish Imperial Tobacco with support during the transition, including guaranteed access to retail shelf space for a short period.
The vote approving the final order was three to two, with commissioners Julie Brill and Joshua D. Wright voting no.
Reynolds American is the parent company of R.J. Reynolds Tobacco Co.; American Snuff Co. LLC; Santa Fe Natural Tobacco Co. Inc.; Niconovum USA Inc.; Niconovum AB; and R.J. Reynolds Vapor Co.
R.J. Reynolds Tobacco is the second-largest U.S. tobacco company; its brands include three of the best-selling cigarettes in the United States: Newport, Camel and Pall Mall. American Snuff is the nation’s second-largest manufacturer of smokeless tobacco products; its leading brands are Grizzly and Kodiak. Santa Fe Natural Tobacco manufactures and markets Natural American Spirit 100% additive-free natural tobacco products, including styles made with organic tobacco. Niconovum USA and Niconovum AB market nicotine replacement therapy products in the United States and Sweden, respectively, under the Zonnic brand name. R.J. Reynolds Vapor manufactures and markets Vuse electronic cigarettes.
Click here to view the final order.
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