Tim Brake
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JT to buy Reynolds' Sante Fe unit, aims for deal this week

Japan Tobacco has entered the final stages of talks to purchase Reynolds American subsidiary Santa Fe Natural Tobacco, moving forward with a growth strategy centering on overseas acquisitions.

Reynolds American Inc, through its subsidiaries, manufactures cigarettes and other tobacco products in the United States. The products brand include CAMEL, PALL MALL, WINSTON, among others.

The potential deal, including the likely price, was first reported by Bloomberg last week, though the report gave no time frame.

Officials at Japan Tobacco (JT) and Reynolds American were not immediately available for comment.

With the purchase of Sante Fe, JT hopes to gain marketing rights for the Natural American Spirit brand, which is sold in the United States, Japan and Europe, the Nikkei said.

Reynolds could exclude American rights for the brand - marketed as additive-free and popular among younger smokers - from the deal, the paper said, without citing its source.

A former state monopoly, JT has been aggressively expanding offshore after the government opened the domestic market to foreign competitors in the 1980s and privatized JT in 1994.

It has spent billions of dollars to buy tobacco, food and pharmaceutical businesses at home and overseas, including RJR Nabisco's non-U.S. tobacco business for $7.8 billion in 1999, and Britain's Gallaher Group for 7.5 billion pounds ($11.37 billion) in 2007.

With brands including Winston, Camel and Mevius, JT wants to eventually become the world's biggest cigarette maker, overtaking first and second-ranked Philip Morris International and British American Tobacco .

Shares in JT were down 2.1 percent in early morning trade, roughly in line with the broader Tokyo market.