NEW YORK (TheStreet) -- Reynolds American's (RAI) merger with Lorillard (LO) has been put on hold due to fears of anti-trust issues, but a potential Imperial Tobacco (ITYBY) asset sale could help alleviate those concerns.
Imperial Tobacco Group is planning to sell 30% of the shares in its Madrid unit next month to raise $800 million, Bloomberg reported.
Such a move would strengthen the company's buying position if speculation that regulators will decide that a Reynolds/Lorillard merger can not move forward without the two tobacco companies first selling off some of their assets is true.
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Reynolds and Lorillard are the second and third largest tobacco manufacturers in the U.S., respectively.
Reynolds American shares are up 0.45% to $60.73 in early market trading, while Lorillard shares are up 0.5% to $61.81 on Monday.
TheStreet Ratings team rates REYNOLDS AMERICAN INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:
"We rate REYNOLDS AMERICAN INC (RAI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income."