Reynolds American and Lorillard Strike a Big Tobacco Deal

The No. 2 and 3 U.S. tobacco companies are merging in a $27.4 billion deal. What should investors do about it right now?

Mark Reeth
Mark Reeth and Sean O'Reilly
Jul 16, 2014 at 6:00PM
Consumer Goods

The No. 2 and 3 U.S. cigarette companies, Reynolds American (NYSE:RAI) and Lorillard (UNKNOWN:LO.DL), announced a $27.4 billion merger on July 15. While the new business, which will keep the Reynolds American name, will still trail tobacco giant Altria (NYSE:MO) by a wide margin in terms of market share, the company should remain very profitable.

Smoking is bad for people, but is it good for business?

In this segment of The Motley Fool's Where the Money Is, consumer-goods editor Mark Reeth and analyst Sean O'Reilly discuss whether the merger will bless investors with large dividends and strong stock gains, and if it was smart for the company to drop blu eCigs during the deal.