Imperial's 'Big' Jump to No. 3 in U.S.

Chief executive outlines strategic plans for Reynolds-Lorillard acquisitions

Published in CSP Daily News

By  Melissa Vonder Haar, Tobacco Editor

BRISTOL, U.K. -- It was an historic day for Reynolds American Inc., acquiring the third-largest tobacco company in the United States, its close competitor, Lorillard Inc. ( click here for coverage). The day was equally newsworthy for Imperial Tobacco Group PLC; the British company is set to become the third-largest player in the U.S. market by acquiring a number of brand divestitures and other assets from the Reynolds-Lorillard deal.

The $7.1-billion purchase agreement, as reported in a 21st Century Smoke/CSP Daily News Flash, will include Reynolds' Winston, KOOL and Salem cigarette brands, as well as Lorillard's Maverick cigarettes and blu eCigs. Additionally, Imperial will acquire Lorillard's Greensboro, N.C., factory and offices, along with a substantial amount of the company's sales force.

As Imperial's chief executive Alison Cooper said during a Tuesday webcast, the deal will transform the company "from a distant No. 5 in the (U.S.) market with a 3% share, to No. 3 with a 10% share; from no presence in e-cigarettes in the U.S., to market leadership with the clear No. 1 brand; from a business that has focused on 19 states, to national distribution supported by an experienced sales force; and from a newish management team with a growing track record, to the opportunity to combine the best of both companies to create a strong management team.

"The primary assets for us will be Winston and blu," Cooper continued. "In line with the approach we are taking within the existing portfolio, the primary brands will be the focus for the lion's share of time and money invested."

In terms of its cigarette business, which will include three of the top-10 cigarette brands alongside Imperial's existing Commonwealth-Altadis USA Gold Brand, Winston will be the top focus.

Winston "is the second–most-popular brand in the world, so clearly has brand equity," Cooper said, "equity which we know exists in the U.S. but has been untapped in recent years. It currently has around 2.1% market share in the U.S., and is No. 7 in the market, despite having had little or no investment for a number of years."

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