Gallaher links with US rival Reynolds

12 April 2012

CIGARETTE group Gallaher has bolstered its European coverage, creating a joint venture with US rival RJ Reynolds to make, market and sell US-blend brands.

The brands will be Benson & Hedges American Blend, Benson & Hedges Red and Reynolds, which is sold in a new 'slide-box' pack. The joint venture will focus on four areas where Gallaher's presence is weak - France, Spain, Italy and the Canary Islands. Chief executive Nigel Northridge predicted the deal would lift earnings in the medium term.

The company will be called RJ Reynolds-Gallaher International and will be headquartered in Switzerland. RJ Reynolds will contribute $75m (£48m) to $100m over the next five years. This is because the value of volume sales from Gallaher's brands will be more than those from RJ Reynolds. The payment will effectively balance the books.

Gallaher, which owns Silk Cut and Mayfair, acquired the Benson & Hedges trademark in Continental Europe in 1993. RJ Reynolds is the second largest tobacco firm in the US with brands such as Camel, Winston and Salem.

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