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R.J. Reynolds Nears Key Date for Merger Approval

GREENSBORO, N.C. -- R.J. Reynolds Tobacco Holdings has put "no deadline pressure" on government regulators over its proposed acquisition of Brown & Williamson Tobacco Corp. and would consider further extending the antitrust review period past the current June 11 end-date, according to a Reynolds spokesman quoted in the Greensboro, N.C.-based Business Journal.

Last week, widespread media reports said that examiners at the Federal Trade Commission are objecting to the $3 billion merger that would create Reynolds American, which would be based in Winston-Salem, N.C., and bring an additional 1,000 employees to the city. The FTC is said to have concerns that the deal would harm competition in the U.S. tobacco industry and raise prices for consumers.

In May, Reynolds agreed to extend the FTC's review period until June 11, the third such extension. Though Wall Street analysts have speculated that Reynolds wouldn't agree to further extensions, Reynolds spokesman Seth Moskowitz said the company "would consider" additional FTC requests for a lengthier review period.

"We have put no deadline pressure on the FTC," Moskowitz said. "The June 11 date is a date the FTC specifically asked for as an extension and we said OK. There is nothing more to it than that."

The combination, announced in November, would create something of a "duopoly" in the U.S. tobacco industry, with two firms controlling more than 80 percent of the market. No. 2 cigarette maker R.J. Reynolds of Winston-Salem has nearly 22 percent share of the domestic market, with B&W the No. 3 U.S. firm with 10 percent market share.

Together, the companies would control about 32 percent of the market, trailing industry leader Philip Morris's nearly 50 percent share. Greensboro-based Lorillard Inc. would become a distant No. 3 cigarette maker, holding about 8 percent share.
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