Lorillard Acquires British E-Cigarette Company SKYCIG (LO)

Lorillard Acquires British E-Cigarette Company SKYCIG (LO)

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Tobacco company Lorillard Inc. (LO) announced early on Tuesday that is has acquired all of the assets and operations of SKYCIG, a Britain-based electronic cigarette company. Lorillard will pay approximately £30 million in cash once the deal closes and possibly an additional £30 million in 2016 based on the achievement of certain financial performance benchmarks.

This acquisition provides Lorillard with a global presence in the rapidly growing e-cigarette industry, along with its U.S. e-cigarette brand blue eCigs

Following the close of the acquisition, SKYCIG will operate as a separate operating subsidiary under Lorillard’s ownership. LO intends to retain SKYCIG’s current management team and its current business locations in the U.K.

“It has been Lorillard’s mission to be first and best in the electronic cigarette category, and with the acquisition of SKYCIG, our mission is now a global one,” said Murray Kessler, Lorillard Chairman, President and CEO. “We believe that with the addition of SKYCIG, Lorillard is uniquely positioned to lead the global e-cigarette industry to reach its full potential, and to do so in a responsible manner. We firmly believe that e-cigarettes may present the most significant harm reduction option ever made available to smokers in the U.S. and abroad and we look forward to working with regulators around the world to confirm this conclusion.”

Lorillard shares were down 20 cents, or 0.45%, during early morning trading on Tuesday. The stock is up 15.09% year-to-date.

The Bottom Line

Shares of Lorillard (LO) offer a dividend yield of 4.91% based on Monday’s closing price of $44.78 and the company’s annualized dividend payout of $2.20 per share.

Lorillard Inc. (LO) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.

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