E-cigarettes could sweeten potential Reynolds-Lorillard deal

By Jilian Mincer NEW YORK (Reuters) - When Lorillard Inc bought the blu eCigs brand two years ago, the electronic cigarette had a 10 percent share of a tiny U.S. market, generating about $50 million in sales. The turbo-charged growth means that blu and Lorillard's British SKYCIG e-cigarette brand may be the assets with the sweetest potential for Reynolds American Inc as it holds talks over a deal to acquire its U.S. rival. "Acquisition of Lorillard would give Reynolds a distinct advantage in the e-cig market," said Steve Marascia, Director of Research at Capitol Securities Management. A combination of Lorillard and Reynolds, which is 42 percent owned by British American Tobacco, would create a formidable rival to Altria Group Inc, which owns the Marlboro brand and controls about 50 percent of the traditional cigarette market in the U.S. E-cigarettes are slim, reusable, metal tube devices containing nicotine-laced liquids that come in exotic flavors.

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