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RICHMOND, Va.-- 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.

Financial experts say the possible merger between Lorillard and Reynolds American would be good for stakeholders but might not be good for current employees.

Two Triad tobacco power-houses might merge - talks are underway now for a merger between Lorillard and Reynolds American.

A merger also would involve British American Tobacco, which owns a 42 percent stake in Reynolds.

Greensboro Mayor Nancy Vaughan released the following statement in reaction to discussions regarding the possible acquisition of Lorillard Inc. by Reynolds American Inc.: "Reynolds and Lorillard are mainstays in the Triad community as strong economic and corporate partners. Lorillard especially has long served as an example of great corporate citizenry in Greensboro. The company is always first in line to support local nonprofits in need, the arts, and is a leader in giving through the United Way. Lorillard employees are some of the most committed volunteers in our community. I am hopeful that any changes in ownership or leadership will not detract from that continued support to our community. Most importantly, I hope that the future will remain bright for Lorillard's current employees and the company as a whole in Greensboro."

Related:

Report: Reynolds American, Lorillard In "Advanced Merger Talks"

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