Reynolds American close to getting FTC approval for Lorillard deal - WSJ

(Reuters) - Camel cigarette brand owner Reynolds American Inc's (RAI.N) planned acquisition of smaller rival Lorillard Inc (LO.N) is expected to receive U.S. antitrust clearance as soon as next week, the Wall Street Journal said. (http://on.wsj.com/1Hxtr4g)

Reynolds offered to buy Lorillard for $25 billion in a deal that would combine the No. 2 and No. 3 U.S. cigarette companies into an entity that controls about 40 percent of the market.

While Reynolds American and the U.S. Federal Trade Commission declined to comment, Lorillard was not immediately available.

Reynolds and Lorillard will benefit financially if they get clearance and close the deal by June 1. Lorillard can save $240 million it would otherwise have to pay shareholders as quarterly dividend, if it remained a separate entity, WSJ reported, citing people familiar with the deliberation.

The deal has attracted intense antitrust scrutiny as a successful merger would result in a market 90 percent dominated by just two companies.

Marlboro maker Altria Group Inc (MO.N) leads the market with a 49 percent share.

Reynolds said in November that it expected the Federal Trade Commission to announce its decision in late January or early February.

In January, Reynolds and Lorillard shareholders approved the merger.

Reynolds, which will get Lorillard's top-selling menthol cigarette Newport from the acquisition, said last year that it would sell Lorillard's e-cigarette blu and four other brands to Imperial Tobacco Group Plc (IMT.L) to allay antitrust concerns.

Reynolds and Lorillard argue that their merger and the Imperial deal would create two strong competitors for Altria.

Reynolds' shares were marginally up at $75.6 in extended trading on Thursday, while Lorillard's shares were flat.

(Reporting by Yashaswini Swamynathan in Bengaluru)