Japan Tobacco to buy Reynolds American unit for $5bn

Japan Tobacco has agreed to buy the Natural American Spirit business of Reynolds American Inc (RAI) outside the US for around $5bn.

The transaction is expected to be completed by early 2016 and Japan Tobacco said existing operations of the acquired companies will be expected to remain unchanged in order to fully benefit from their extensive knowledge and experience.

Mitsuomi Koizumi, president and chief executive officer of the JT Group, said: “Natural American Spirit, which has a strong and international presence in a premium priced category, will allow the JT Group to further extend its brand portfolio.

"This strong and unique brand equity combined with an energetic and experienced team of people will further strengthen our group’s business foundation.”

The Natural American Spirit brand is described as an additive-free, premium cigarette. Since its launch in the US in 1982 by Sante Fe Natural Tobacco Company, the brand has enjoyed strong growth momentum in the US, Japan, Switzerland, Italy, Spain, and the UK.

In Japan, which now accounts for the majority of the sales volume worldwide excluding the US, the brand has experienced significant growth, Japan Tobacco said.