Reynolds American to buy Lorillard for $27.4 billion

NEW YORK (CNNMoney) -- Reynolds American and Lorillard announced a $27.4 billion merger on Tuesday that will bring together the No. 2 and No. 3 U.S. cigarette makers.

The deal means the Camel and Newport brands will be owned by the same company.

The companies also announced they will each sell off some of their other brands as part of deal. Imperial, the fourth-largest international tobacco company, has agreed to purchase KOOL, Salem, Winston, Maverick and blu eCigs in a separate $7.1 billion transaction.

The merger had been rumored since the end of February. It has the support of the boards of Reynolds and Lorillard as well as British American Tobacco, the largest shareholder of Reynolds.

Shares of Reynolds and Lorillard were both lower in premarket trading on the announcement.

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