Big Tobacco Firms Merge as Cigarette Sales Decline

Faced with a steady decline in cigarette sales, Reynolds American Inc. announced Tuesday that it would buy the third largest tobacco company in the U.S., Lorillard, Inc. for $27.4 billion.

The deal will make Reynolds American the second largest tobacco company in the U.S. after Altria Inc., maker of Marlboro cigarettes.

The companies will merge Reynold’s flagship brands, Camel, Pall Mall and American Spirit cigarettes, with Lorillard’s portfolio of Newport menthol-flavored cigarettes and e-cigarettes. Those two sectors are isolated areas of growth in an industry that has seen U.S. cigarette consumption decline by 4% last year, the Wall Street Journal reports.