Tobacco companies announce merger

R.J. Reynolds Tobacco Holdings and Brown & Williamson Tobacco Company, the U.S. cigarette business of British American Tobacco, announced they would merge, creating a company with about a third of the U.S. market. The merger is worth about $2.6 billion.

The proposed merger was largely regarded as positive news in an industry plagued with bad news over the last four to five years. Quota cuts, foreign competition, a drop in domestic consumption and a buyout that's yet to happen have hurt growers.

If approved, the new publicly traded company would operate under the name of Reynolds American, Inc. Reynolds shareholders will control 58 percent of the new company while shareholders of British American Tobacco would control 42 percent.

The merger would save about $500 million annually for the company. Headquarters for the new company would be in Winston-Salem, N.C.

Grower representatives such as Graham Boyd, executive vice president of the N.C. Tobacco Growers Association, said it's hard to say what the merger of the No. 2 RJR and No. 3 B&W means for farmers.

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