Reynolds American Inc., the producer of Camel cigarettes, said it’s in talks to acquire Lorillard Inc. in a transaction that would create a closer competitor to U.S. tobacco market leader Altria Inc.

Lorillard also confirmed the discussions in a statement today, following reports that a transaction may be close after months of negotiation. British American Tobacco Plc, the U.K. company which owns 42 percent of Reynolds, said it expects to support the transaction by subscribing for additional shares to maintain its stake. Separately, Imperial Tobacco Group Plc said it’s in talks with the U.S. companies to buy some brands.

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