Business: Cigarette companies: Plucky strike
A merger is the latest sign of Big Tobacco’s resilience.
British American Tobacco (BAT) announced on January 17th a final deal to buy Reynolds American for $49 billion.
BAT already owns 42% of Reynolds; buying the rest of it will create the world’s largest listed tobacco company by sales and profits.
It will peddle brands such as Dunhill, Camel and Newport.
The casual observer might imagine the deal to be a frantic bid to revive an ailing industry.
On the contrary.
Cigarettes may kill you, but the big companies that make them are rather healthy.
That is despite a decline in smoking rates.
In 2015 just over a fifth of adults smoked, estimates the World Health Organisation, down from almost a quarter ten years earlier.
This drop hardly helps companies, but it isn’t ruinous either.
Smoking is still popular in certain spots.
More than three-quarters of men light up in Indonesia, for example.
The habit is becoming more common among men in Africa and the eastern Mediterranean.
And though global smoking rates have fallen, population growth means that about 1.1 billion people still smoke, roughly as many as did in 2005.
This, combined with rising prices, means that the value of retail sales jumped by 29% in the decade to 2015, according to Euromonitor, a data firm.
The gravest threat to big cigarette makers comes from rivals.
Indeed, this week’s deal increases the chance that Altria, which sells Marlboro in America, will be bought by Philip Morris International, which sells Marlboro elsewhere and is the industry’s leader to date—a scary prospect even for a merged BAT and Reynolds.
事实上，本周的交易增加了在美国销售万宝路的Altria公司将被Philip Morris International收购的机会，这家公司是在其他地方销售万宝路，至今都是业界领袖，即使对于合并后的BAT和Reynolds，它仍有着惊人的前景。
Regardless of whether their rivals’ deal proceeds, the merger of BAT and Reynolds has clear logic.
The firms claim it could save at least $400m each year.
Reynolds will also give BAT access to America, a market that once looked repulsively litigious but now seems stable.
Companies still operate under a vast settlement reached with American states in 1998, but separate class-action suits have turned out to be less costly than feared.