WINSTON-SALEM, N.C. (AP) _ The merger of R.J. Reynolds Tobacco Co. and Brown & Williamson has received the blessing of the Federal Trade Commission, removing one of the deal's last significant hurdles.
The FTC voted unanimously to close its investigation of the proposed $2.6 billion cash and stock transaction, saying Tuesday the combination of the nation's second- and third-largest cigarette makers was unlikely to lessen competition in the U.S. cigarette market.
The deal, announced in October, still requires approval from the Securities and Exchange Commission and RJR shareholders.
It combines the American tobacco businesses of RJR and British American Tobacco PLC, the parent company of B&W. The new company will rank second in U.S. cigarette market share after industry leader Philip Morris USA of Richmond, Va., a unit of Altria Group Inc.
The combined companies will produce one of every three cigarettes in the United States. RJR is to hold a 58 percent controlling stake in the new company, which will be based in its hometown of Winston-Salem and known as Reynolds American Inc.
The merger also will end Brown & Williamson's presence in Louisville, Ky., where it has been based since the late 1920s. Company officials have said 450 workers there will either lose their jobs or be offered transfers to North Carolina.
FTC Chairman Timothy J. Muris and Commissioners Orson Swindle and Thomas B. Leary issued a joint statement regarding the decision, saying their approval was based on the fact that B&W plays an increasingly minor role in the U.S. cigarette market.
R.J. Reynolds is the maker of cigarette brands including Camel, Winston, Salem and Doral, while Brown & Williamson sells Kool, Lucky Strike, GPC and Capri brands.
``We will be able to compete more efficiently across entire spectrum of the U.S. cigarette market, both against major competitors and the smaller competitors which have entered the industry in the last five years,'' said Maura Payne, a spokeswoman for RJR.
Earlier Tuesday, the IRS established that the merger will be tax free for RJR and British American Tobacco shareholders, clearing another regulatory obstacle.