Reynolds Sells Off Lane Unit

NEW YORK ( TheStreet) -- Reynolds American ( RAI) said it will sell its Lane unit to Denmark's Scandinavian Tobacco for $205 million in cash.

The transaction is expected to close in the first half of 2011.

"Reynolds American's operating companies are strategically focused on key brands in the cigarette, moist-snuff and modern smoke-free categories of the tobacco business, so this is an opportunity to maximize the potential of the Lane business and brands under an owner who is focused on the 'other tobacco products' category," Susan Ivey, Reynolds American's CEO, said.

Lane, which make products such as Kite and Bugler roll-your-own tobacco, and Captain Black pipe tobacco, contributed about 4 cents a share to RAI's annual earnings, the company said. RBC Capital Markets served as RAI's financial adviser for the transaction, and Jones Day served as RAI's legal counsel.

Shares of Reynolds American are down 0.2% to $32.72.

Peers of the company have also been lackluster. Altria ( MO) is flat at $24.11, while Lorillard ( LO) has fallen 0.3% to $76.78. Philip Morris International ( PM) is down 0.3% to $56.33.

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-- Written by Andrea Tse in New York.

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