Reynolds American Looks to Acquire Lorillard (RAI, LO)

North Carolina-based tobacco bellwether, Reynolds American (RAI), is reportedly in late stage talks to acquire one of its biggest competitors, Lorillard Inc. (LO).

According to exclusive sources from Reuters, the proposed deal would potentially unite the second and third largest U.S. tobacco companies under one roof. Furthermore, this transaction is expected to be a bit more complex than a “plain vanilla” acquisition seeing as how British American Tobacco (BTI), another key player in the industry, owns roughly a 42% stake in Reynolds American. The proposed deal should be finalized within a matter of weeks; however, people involved in the negotiations asked not to be named and couldn’t disclose any more information since the matter is not yet public.

Shares of Lorillard jumped 10.40% on Wednesday, closing at $62.63, while Reynolds stock gained 4.38%, finishing the day at $59.77. Lorillard and Reynolds are up 23% and 19% YTD, respectively.