Lorillard Shares Jump 5% On Rumor Of Sale To Reynolds

Lorillard Inc.LO jumped as much as 5 percent after talk on a CNBC television program about its potential merger with Reynolds American Inc. RAI. In an interview with Jim Kramer, journalist David Farber re-capped rumors of the deal that have circulated for weeks. Farber said Wells Fargo analyst Bonnie Herzog believes "a deal is likely" and that Reynolds could pay up to $80 a share for Lorillard. "I can tell you there's a lot going on, but I can't tell you there's a deal!" Farber said. Anti-trust issues concerning the companies menthol cigarette brands may bear on a merger and Farber said Reynolds would seek to divest its Kool brand and perhaps others. Lorillard sales are heavily dependent on the menthol brand Newport. "A lot of the talk seems to be finding buyers for those brands prior to embarking on a potential deal," Farber said. Lorillard traded up nearly 5 percent at $64.20, Reynolds jumped nearly 2 percent to $61.25 British-American Tobacco, with a 42 percent stake in Reynolds, was up 1.6 percent on the London Stock Exchange.
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