Morgan Stanley Speculates on How Rumored Merger Might Affect Lorillard

In a report published Thursday, Morgan Stanley analyst David J. Adelman commented on recent developments related to

. In the report, Morgan Stanley noted, “Because of FTC/DOJ and menthol risk, it appears difficult for RAI to purchase LO and generate attractive risk-adjusted returns. Perhaps the rumor emerged now because the potential that such a transaction could strengthen RAI's position with BAT into the pending expiration of their standstill. RAI and LO have not commented on FT reports of a potential merger and we have no knowledge of any potential transaction.” Lorillard closed on Wednesday at $53.48.