Winston-Salem-based Reynolds American says it's sold the international rights to it's Natural American Spirit brand. The sale of the premium line to Japan Tobacco Group, announced Wednesday, is worth about $5 billion dollars cash.
The deal means Reynolds now mostly has its hands out of the international cigarette business.
But why give up on foreign profits? Well, Reynolds says the company can now focus on grabbing more of the U.S. market.
NC State University economist Blake Brown says simplifying can make sense. Reynolds will have to deal with regulations in fewer countries, and international growth markets are scarce anyway.
He says this specialization isn't necessarily a new trend. Reynolds is following its competition. Philip Morris spun off its international branch years ago.
“Most U.S. companies that used to export cigarettes, basically, they moved those operations to those markets offshore, or they divested themselves of them,” Brown said.
And the $5 billion in cash is nothing to sneeze at. The proceeds from the Natural American Spirit sale could very well help Reynolds manage the debt it took on when it recently purchased competitor Lorillard.