Reynolds American, Lorillard Get U.S. FTC Clearance For Proposed Merger

(RTTNews) - Reynolds American Inc. (RAI) and Lorillard Inc. (LO) announced that the U.S. Federal Trade Commission or FTC has voted to accept a proposed consent agreement, authorizing RAI to close its proposed acquisition of Lorillard.

The FTC clearance is subject to certain conditions, most of which the companies had previously agreed to as part of the related divestiture transactions announced in July 2014.

The closing of the acquisition and related transactions remains subject to certain other Conditions.

The remaining significant condition to closure of the transaction is approval from the federal district court overseeing United States v. Philip Morris USA Inc., et al. This case was brought by the U.S. Department of Justice in 1999 against several tobacco companies, including R.J. Reynolds Tobacco Company, an indirect subsidiary of RAI, and Lorillard Tobacco Company, a subsidiary of Lorillard, Inc.

Under the terms of the court's remedial order entered in 2006, before R.J. Reynolds can transfer cigarette brands to Imperial Tobacco's ITG Brands, LLC subsidiary, the court must enter an order finding that ITG Brands intends to and is capable of complying with the court's remedial order in relation to the cigarette brands that ITG Brands is purchasing. The motion is unopposed, the matter has been briefed, and the court held a hearing with all parties on May 19, 2015.

The companies have requested that the court rule expeditiously, and they are confident that the acquisition and related transactions will close by the end of June 2015.

Reynolds agreed in mid-July to acquire smaller rival Lorillard and its popular Newport menthol brand in a cash and stock deal valued at $27.4 billion.