40
TOBACCO BUSINESS INTERNATIONAL
SEPTEMBER/OCTOBER 2014
I
s it a new blu world for e-cigs? The
$27.4 billion intended big deal
merger joiningReynoldsAmerican
(RAI) and Lorillard threw the industry
a curve ball when it divested off e-cig
category brand leader blu to Imperial
Tobacco Group. Some speculation on
merger rumors had previously been
that RAI would become an e-cig
powerhouse with VUSE and blu, but
the deal went a different way, leaving
tobacco analysts like Bonnie Herzog
from Wells Fargo in New York City
and Philip Gorham from Morningstar
in Amsterdam reportedly “surprised”
that blu went to Imperial when the
merger was announced in mid-July.
“Bottom line, it was a business
decision” to retain Vuse as the sole e-cig
brand sold by the company when it
merges, RAI spokesman David Howard
told CNBC recently. “Our approach is
to remain focused on Vuse.”
Clearly, the decision was also made
to help ease regulatory concerns about
a potential duopoly and allow the deal
to go through. “Regulatory issues most
certainly were part of the conversation
regarding selling off blu,” Howard
said to CNBC. Industry analysts have
posited that Imperial only agreed to
purchase the other brands in the deal—
Kool, Winston, Maverick and Salem
brands—to get blu.
Putting the strategic thinking
aside, the announcement that blu was
changing hands rocked the nascent
e-cigarette industry, leading to much
speculation about how the transaction—
assuming it goes through—will affect
Blu Aftermath
If Imperial
Tobacco lands
e-cig category
brand leader
blu, how will it
affect the
industry?
By Renée M. Covino
electric
ALLEY
