Boston, MA 06/04/2014 (wallstreetpr) – Lorillard Inc. (NYSE:LO) is already a formidable force in the U.S. electronic cigarette market. The company controls more than 40 percent of the U.S. e-cigarette market share. And now it has big plans for continental Europe.
The company intends to enter France, Germany and Netherlands with its electronic cigarette brand Blu, this year or early 2015, according to Blu’s U.K. CEO, Jacob Fuller.
Although Europe appears to be a promising market for Lorillard, the company will be in for intensive competition from British American Tobacco PLC (ADR) (NYSEMKT:BTI), which is also plotting massive expansion in the region.
Tough tobacco laws
BTI started U.K. sales of its e-cigarette brand, Vype, last year, and it recently announced plans to expand the sale of the product into more European countries. That comes as authorities in Europe continue to tighten the noose around the necks of tobacco manufacturers, and the stringent policies have had widespread impact on the bottom line of British American Tobacco (NYSEMKT:BTI). As such, BTI and its peers in Europe are shifting focus to e-cigarette because of the favorable regulatory measures around the product.
In the U.K, Lorillard’s Blu expects to generate 25 million pounds in revenue this year and 100 million pounds in revenue by the end of 2015.
Deal chatters
The planned expansion of Lorillard Inc. (NYSE:LO) into continental Europe comes at a time when the company is reported to be in merger talks with its U.S. rival Reynolds American, Inc. (NYSE:RAI). The two cigarette manufacturers are reportedly pushing for a tie-up to increase their market share in the U.S. and especially in the e-cigarette category.
BTI is also mentioned in the talks as a possible third-party player in case the companies might be forced to divest assets to win regulatory approval for a merger. It is also worth noting that BTI already owns about 42 percent stake in Reynolds and may bid for the company at the end of the standstill agreement in July. Reports are also widespread that BTI may consider a deal with Lorillard Inc. (NYSE:LO).
