Tobacco firms Reynolds, Lorillard in merger talks

Cigarette makers Reynolds American Inc. and Lorillard Inc. say they are in talks of a possible merger that would combine two of the nation's biggest tobacco companies.

The announcement Friday follows media reports over the past few months about the possible combination that would create a formidable No. 2 to rival Altria Group Inc., owner of Philip Morris USA.

The companies said no agreement has been reached and there's no assurance that one will be.

Reynolds markets Camel, Pall Mall and Natural American Spirit cigarettes. Lorillard sells Newport, Maverick and Kent cigarettes.

On Friday, Imperial Tobacco Group PLC also said it was in talks to buy some of Reynolds and Lorillard brands. A merger also would involve British American Tobacco, which owns a 42 percent stake in Reynolds.