Japan Tobacco to Buy Overseas Assets of Reynolds' Natural American Spirit for $5 Billion

TOKYO—Japan Tobacco Inc. said Tuesday it would pay ¥ 600 billion ($5 billion) to acquire rights to the Natural American Spirit brand of cigarettes outside the U.S. from Reynolds American Inc., the latest step by the Tokyo-based company to expand beyond the shrinking Japanese market.

Japan Tobacco said it reached the deal over Natural American Spirit with U.S. tobacco giant Reynolds American Inc., which owns brands such as Camel. Under the deal, Japan Tobacco will acquire non-U.S. trademarks and all outstanding shares of Reynolds American subsidiaries outside the U.S. that sell the Natural American Spirit brand.

Natural American Spirit has advertised itself as an "additive-free" brand. In August, antitobacco activists sent a letter to the U.S. Food and Drug Administration objecting to the language. Sales of the brand last year totaled $658 million, more than double the $289 million in sales reported in 2009.

Japan Tobacco said that 2014 sales of the brand outside the U.S. were ¥ 17.6 billion.

Japan Tobacco has made a series of large overseas acquisitions to combat falling sales at home, where the overall population is shrinking and the proportion of those smoking cigarettes is also falling.

Write to Peter Landers at [e-mail]

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September 29, 2015 07:05 ET (11:05 GMT)

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