Lorillard May Be Takeover Target After Spinoff..

June 5, 2008 - Lorillard Inc., the cigarette producer being spun off by Loews Corp., may attract takeover bids from Reynolds American Inc. and Imperial Tobacco Group Plc as shrinking U.S. cigarette demand forces manufacturers to combine, according to reports from two analysts. Filippe Goossens (a Credit Suisse analyst) and Erik Bloomquist (an analyst at J.P. Morgan Securities Ltd.) believe Reynolds, the second-largest U.S. tobacco company, may try to buy Lorillard in the next year or two. Another possible bidder is London-based

Imperial, which last year acquired Commonwealth Brands, the fourth-largest U.S. cigarette maker. Buying Lorillard would possibly require Reynolds to sell menthol brands Kool and Salem to satisfy U.S. antitrust regulators, Bloomquist said.

Lorillard, led by Chief Executive Officer Martin Orlowsky, increased Newport's share of U.S. smokers to 9.85 percent in the first quarter, up 0.3 percentage point from a year earlier. (Newport sales are strongest in the eastern part of the U.S.)Menthol cigarettes including Altria Group Inc.'s Marlboro and Reynolds's Kool accounted for 28.4 percent of the U.S. cigarette market, Orlowsky told analysts April 28, 2008. Lorillard shipped 7.65 billion Newport cigarettes in the first quarter, 1 percent less than a year earlier. Total U.S. cigarette shipments dropped faster, falling 3.3 percent, Orlowsky said. Reference: Lorillard May Be Takeover Target After Spinoff., by Chris Burritt, Bloomberg.com, 6/4/2008. More on Menthol and Tobacco Smoking. (TobaccoWatch.org)