The recently announced acquisition of Lorillard (UNKNOWN:LO.DL) by Reynolds American (NYSE:RAI) is a major game changer in the U.S tobacco market, and it represents a serious competitive threat for market leader Altria (NYSE:MO). Although a stronger competitive position and scale advantages are big positives for investors in Reynolds American, it's important to consider that the tobacco industry is a particularly risky area for investors.

The following slideshow offers some ideas for investors willing to look at the recently announced merger and its investment implications.