Reynolds American, a giant in the tobacco industry, announced on Tuesday that it has agreed to sell its Natural American Spirit cigarette brand rights outside the U.S. and its territories for $5 billion to Japan Tobacco Group.
Reynolds American, whose cigarette brands include Newport, Pall Mall and Camel, will retain its rights in the U.S., but sell its international rights and its associated trademarks in the deal.
The rights in the U.S. will be held by the Santa Fe Natural Tobacco Co., a subsidiary of Reynolds American.
The transaction has come following Reynolds American completing its acquisition of $25 billion of its smaller rival in tobacco, Lorillard earlier this year.
This deal was agreed to in 2014, including selling some of the product to Imperial Tobacco Group in Britain to gain approval of regulators.
Reynolds American’s CEO and President Susan Cameron said this sale would give the company the ability to focus on increasing its sales of all its brands inside the U.S.
Natural American Spirit is marketed as an additive free, premium tobacco product and its largest markets outside the U.S. are Germany, Switzerland and Japan. Close to 280 people are currently employed in companies associated its brand overseas.
This transaction will need regulatory approval and officials expect it to close during 2016.
Japan Tobacco wants to increase its size with acquisitions of international companies.
In 1999, the Japanese company acquired the RJR Nabisco Holdings Corp International operations of brands that included Winston and Camel, for $8 billion.
The domestic business of tobacco for RJR Nabisco was spun off later, eventually becoming a big part of Reynolds American when operations merged with Brown & Williamson its U.S. business.
Japan Tobacco in 2007 acquired the Gallaher Group, the Benson & Hedges British cigarette maker for $15 billion.
The brand has seen strong growth internationally in Germany, Britain, Japan, Spain, Italy as well as Switzerland said Japan Tobacco.