Tobacco shares power FTSE higher as merger talks heat up
Tobacco stocks pushed the FTSE 100 higher at open today after details of a mega-merger between two of the largest US tobacco companies reached final stages.
According to reports, Reynolds American and Lorillard, along with key Reynolds stakeholder British American Tobacco, have agreed the price at which the merger will go through.
The are now finalising details - such as which branding and production facilities to dispose of - in order to meet antitrust standards.
Talk that details of the merger could be announced anyday sent shares surging just after 8am.
British American Tobacco was up 1.7%, while peer Imperial Tobacco climbed 3.3%.
The shares - favoured by a number of well-known income fund managers, among them Neil Woodford - pushed the wider FTSE 100 index up 0.3% at 6,690 points.
Negotiations between the three parties began earlier this year, but have increased in activity in recent days. However, no deal has yet been confirmed by the
Reynolds brands include Camel and Pall Mall, while Lorillard brands include Maverick and Old Gold. Lorillard also has a profitable business selling the Newport brand of menthol cigarettes.
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