Tobacco Industry News

National

After years of speculation, Altria will buy UST For $10.4 billion
Tobacco giant Altria Group, Inc. has announced a merger with UST, a major smokeless tobacco manufacturer. The $10.4 billion acquisition is expected to take the edge off of flagging U.S. cigarette sales by taking advantage of the growing smokeless tobacco market. Smokeless tobacco has risen in popularity in response to the prominence of public smoking restrictions. Altria announced that the deal is expected to increase operating cash flow from $3.5 billion to over $4 billion. This acquisition is only the latest major move by Altria, after its spinoff of Philip Morris International in March 2008. For more details on the merger, click here.

Reynolds American to eliminate 10% of U.S. workforce
Reynolds American, the second-largest tobacco company in the United States, plans to respond to dropping cigarette sales by cutting its workforce. Over five hundred jobs will be eliminated to cut company costs. So far this year, Reynolds cigarette shipments have decreased by 9.8%, a considerable plunge in sales that adds to an average annual decline of two to four percent in recent years. The company plans to increase advertising dollars spent on the Camel brand and its smokeless tobacco products. Click here to read more.

Philip Morris extends bid for Rothmans after acquiring 67.8 per cent of shares
U.S. tobacco company Philip Morris has extended a bid to take over Rothman’s Inc., after acquiring over two thirds of the Canadian tobacco company. Rothman’s is the second-largest tobacco manufacturer in Canada, and is the maker of the brands Benson & Hedges, Craven A and Mark Ten. Rothman’s also manufactures lower-priced brands, an area that Philip Morris is looking to explore as cigarette prices soar in many states. Read more here.

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International

Report: China tobacco merger to create No. 4 maker
Two Chinese cigarette companies, Hongyun Group and Honghe Group, have announced plans of a merger that would make the new company the fourth-largest tobacco company in the world. The merger will require approval from China's State Tobacco Monopoly Administration, according to the companies’ letter of intent. The new company will be called Hongyun Honghe Tobacco Group Company Ltd. This deal could be highly profitable because China has the world’s largest population of smokers, and because merging would help decrease the tobacco industry fragmentation that has in part caused Chinese tobacco companies’ revenues to remain far lower than those of their international counterparts. Click here for more information.

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