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(Reuters) - Japan Tobacco Inc (2914.T) is in advanced talks to buy assets worth about $5 billion from Reynolds American Inc RAI.N, including some of the Natural American Spirit tobacco brand, Bloomberg reported on Thursday.
The talks could still fall apart and the size of the deal and nature of assets could change, Bloomberg said, citing people familiar with the talks. (bloom.bg/1VdtN1O)
Both companies declined to comment on the report.
Shares in Japan Tobacco closed morning trade up 3.0 percent, while the benchmark Nikkei average .N225 was flat.
Japan Tobacco, whose brands include Winston, Camel and Mevius, wants to become the world's biggest cigarette maker, overtaking first and second-ranked Philip Morris International (PM.N) and British American Tobacco (BATS.L), though it has not given a time frame.
Bolstered by a sizeable war chest with cash and cash equivalents worth 343.6 billion yen ($2.9 billion), it is counting on overseas growth to offset shrinking demand at home, where the smoking population has fallen for two decades.
This year the company, which is one-third held by the Japanese government, bought Florida-based electronic-cigarette maker Logic Technology Development LLC for an undisclosed price. That followed its acquisition last year of UK-based Zandera Ltd, best known for its E-Lites brand of e-cigarettes.
Reporting by Rishika Sadam in BENGALURU, Ritsuko Shimizu and Chang-Ran Kim in TOKYO; Editing by Don Sebastian and Edwina Gibbs