With slow growth consolidation is predicted in sputtering tobacco industry..

June 26, 2008 - Nik Modi, an analyst at UBS spoke with the Canadian website Reportonbusiness.com. Modi believes that the drive for consolidation is going to pick up now that Altria Group Inc. has spun off its international division and Loews Corp. has spun out Lorillard Inc. In 2008 tobacco companies may not be rewarding shareholders with returns that beat the S&P 500. Three of the four largest U.S. cigarette makers are no longer a smart investment.. "We believe the pivotal question is not whether or not we will see consolidation, but rather what combinations make sense, timing, and the magnitude of synergies," Mr. Modi said. "Fast forwarding a few years, we find it hard to believe that UST, Lorillard, Swedish Match and even Reynolds American will all exist in their current forms." In particular, Modi believes there are two combinations that make the most sense. Reynolds American Inc. buys Lorillard and Altria buys UST Inc. Also, the possibility of Altria buys Swedish Match. - TW Reference: Consolidation predicted in sputtering tobacco industry by David Berman, globeandmail.com, 6/25/2008. Click on image to enlarge.. (TobaccoWatch.org)