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| Reynolds American, Inc - BidnessEtc |
Reynolds American Inc. (RAI) is the second largest tobacco producing company in United States after Altria Group Inc.; its subsidiaries include R.J. Reynolds Tobacco Company, American Snuff Company, Niconovum AB and Santa Fe Natural Tobacco Company. Reynolds American Inc. control around 30% of all cigarettes sold within US. Some of its products like Camel, Pall Mall and Grizzly have continued to capture market share and exhibited tremendous growth momentum in FY2013 and are well on the track to achieve the ultimate goal of market leadership. Reynolds American Inc. has hired Lazard Ltd, as their advisors, to look for a possible deal to acquire the third largest cigarette making company Lorillard Inc. in US. If the deal materializes, it would change the market dynamics and would provide immense growth opportunities to Reynolds American Inc. and would be in a position to pose a threat to Altria Group Inc.
The stock price has seen a phenomenal rise of 20% since last April. The full year EPS rose by 40.2% to $3.14. This upbeat has been as a result of announcement of positive financial results of FY13. Despite the total consumption of cigarettes from 633 billion in 1982 has come down to 286 billion in 2012, the corporation has been successful in increasing its net income by 35.1% in FY13. The rise in profits has been backed by higher cigarette pricing and lower MSA expenses. Since the news of Lorillard Inc. acquisition and impressive annual financial results the company has acquired the attention of investors, the volume of shares traded has significantly increased. The company’s huge liquidity reserves outline strong company position to step into different ventures. Its subsidiary Santa Fe Natural Tobacco Company Inc. has been recently awarded Steward Status by the N.C. Department of Environment and Natural Resources (DENR), it explicitly portrays company’s exemplary environmental performance. Reynolds American Inc. has also taken a number of measures to scale down its electricity usage to help improve the environment.
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