Reynolds American, in which British American Tobacco (BAT) holds a 42 per cent stake, may acquire US cigarette maker Lorillard, the Financial Times reported.

Reynolds has asked the investment bank Lazard to explore a purchase of Lorillard, the third largest US cigarette maker, according to a report by the British financial daily citing unnamed sources. Reynolds American Inc (RAI) is the parent company of RJ Reynolds Tobacco, the second largest US cigarette company.
BAT acquired its stake in RAI via a 2003 agreement under which the US assets of RJ Reynolds and BAT were merged into the publicly traded holding company RAI. According to the Financial Times, a pact preventing a hostile takeover of Reynolds by BAT expires this July.