The proposed merger between Japan Tobacco and Gallaher Group doesn’t look good for RJR.

The bottom line is Japan Tobacco, through a complicated series of previus deals, would basically control the international cigarette market, especially in dev eloping countries:

Analysts said that Japan Tobacco’s success has depended largely on Camel, Salem and Winston.

Japan Tobacco said it is “aiming to further enhance the value of its four Global Flagship Brands – Camel, Winston, Mild Seven and Salem – while placing greater emphasis on American blends and low-tar and low-nicotine lines of products, which are gaining increased attention worldwide.”

“That’s the broader concern given that this deal strengthens Japan Tobacco’s grip on American blends of cigarettes in international markets,” Warren said. “Many smokers, especially in developing countries, like the cache of an American cigarette. It’s like a lifestyle choice for them.”

In a worst-case scenario, Reynolds would be left to strengthen its market share here in the U.S. That can’t be a comforting thought, for reasons that have been well-documented over the last several years.