LONDON (Reuters) - Imperial Tobacco, the world's fourth-largest tobacco group, said on Friday it was in talks with Reynolds and Lorillard to acquire certain assets and brands that could be sold by the two companies.
Reynolds and LORILLARD (LO.NY)are in advanced talks about a deal that would merge the No.2 and No.3 U.S. cigarette makers, Reuters has previously reported.
"The USA remains one of the world's largest and most profitable cigarette markets," it said. "Imperial would proceed with an acquisition only if its terms met strict transaction criteria."
Reuters reported in June that Imperial, known for Gauloises and Davidoff cigarettes, was evaluating a deal for assets likely to be divested from the two U.S. tobacco companies.
Some analysts have said a potential divestiture could top $5 billion and could include Reynolds brands like Kool and Salem.
Purchasing sizable assets from the U.S. tobacco makers would give Imperial additional scale in a competitive and declining U.S. tobacco market, roughly half of which is controlled by Marlboro cigarette maker Altria Group Inc.
Reynolds is 42 percent owned by British American Tobacco.
(Reporting by Kate Holton. Editing by Jane Merriman)
