The era of the mega-merger is well and truly here: BAT and Reynolds, tobacco giants, have agreed to merge with the former subsuming the latter.
This will create a giant tobacco firm,
with a range of brands including Rothmans and Camel, and BAT hopes to
make cost savings of $400m as a result. This implies that there are
economies of scale resulting from the merger.
The companies are aware of the fact that in the developed world, there's is a sunset industry as smoking rates are declining, and this will help protect their market position. I suspect it's only a matter of time before they move into the e-cigarette market in a big way - Camel, for example, have had fashion interests in the past.
The companies are aware of the fact that in the developed world, there's is a sunset industry as smoking rates are declining, and this will help protect their market position. I suspect it's only a matter of time before they move into the e-cigarette market in a big way - Camel, for example, have had fashion interests in the past.
Reuters on the BAT/Reynolds merger, highlighting the
'shareholder value' available. It implies that there are risk-bearing
economies of scale as well as the chance to acquire the technologies
associated with heating rather than burning tobacco.
(Source: tutor2u)
(Source: tutor2u)
