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Reynolds American will buy Lorillard in $27.4 billion deal

After a steady decline in cigarette sales, Reynolds American Inc. announced Tuesday that it would buy Lorillard, Inc., the third-largest tobacco company in the U.S., for $27.4 billion.

Reynolds American is the manufacturer of Camel, Pall Mall, and American Spirit cigarettes. Lorillard, meanwhile, manufactures Newport's menthol-flavored cigarettes and e-cigarettes, which have both seen isolated growth in the last year, while overall cigarette consumption has declined by four percent, according to The Wall Street Journal.

The merger will make Reynolds American the second-largest tobacco company in the U.S. after Altria Inc., the manufacturer of Marlboro cigarettes.