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Japan Tobacco Buys Brand Rights from Reynolds American for $5 billion

Japan Tobacco Inc will pay $5 billion in cash for the brand rights to Reynolds American Inc’s Natural American Spirit tobacco unit outside the United State, according to the two firms. The transaction is expected to close by early 2016 once it is granted regulatory approval. The deal also includes related trademarks and subsidiaries in Japan and Europe, though operations will remain the same.

The Japanese government owns a 33.4% stake in Japan Tobacco. The firm has been growing since privatization in 1994, it acquired RJR Nabisco, a tobacco firm in for $7.8 billion in 1999 and Gallaher Plc for $18.8 billion in 2007.

Mitsumoi Koizumi, Japan Tobacco’s Executive Officer, said the acquisition will extend the company’s product line up. Japan accounts for the majority of Natural American Spirit’s sale outside the United States, with customers mostly in their 20s and 30s.

Reynolds American tapped JP Morgan Securities and Lazard as its financial advisors on the deal, with Jones Day working as a legal advisor.