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Lorillard Shares Jump 5% On Rumor Of Sale To Reynolds

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Lorillard (NYSE: LO) has jumped over five percent after talk on CNBC about its potential merger with Reynolds America (NYSE: RAI).

In an interview with Jim Kramer, journalist David Faber 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 per share for Lorillard.

Related Link: Lorillard, Reynolds Shares Cool Down Following Morgan Stanley Downgrade

"I can tell you there's a lot going on, but I can't tell you there's a deal," said Faber.

Anti-trust issues concerning the companies menthol cigarette brands may bear on a merger and Faber 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," said Faber.

Lorillard is up 5.3 percent at $64.39, while Reynolds is up 1.9 percent at $61.33.

Posted-In: David FaberCNBC News Jim Cramer Rumors Media

 

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