Deals and IPOs

Reynolds American CEO confident of Lorillard merger approval

Reynolds CEO: Transforming the tobacco industry

Reynolds American CEO Susan Cameron is confident federal regulators will allow the tobacco giant to acquire rival Lorillard in a $27.4 billion deal that she said will bolster the company's market share and add value for investors.

Reynolds American, which makes Camel and Pall Mall, is the nation's second-largest tobacco company, behind Marlboro-manufacturer Altria.

"The thing to remember is the big player in this industry [Altria] has over 50 share; [Reynolds American] will come out of this transaction … with 33 market share," Cameron said in an interview with "Closing Bell."

The No. 3 player, Imperial Tobacco, will also benefit—acquiring Winston, Kool, Salem, Maverick and Blu in the deal—and will be a "strong competitor," she added.

A pack of Camel cigarettes, manufactured by Reynolds American, is in a display rack in a newsstand in London.
Simon Dawson | Bloomberg | Getty Images

As for investors who may have been scared off on the merger news, Cameron said, "there was more media speculation on this transaction than anything I can come up with in the last two years."

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However, she believes speculators left the stock in February, when the transaction was announced.

"I believe as people digest what is a very complicated four-party transaction, they will realize that strategically this is fantastic for Reynolds American and it's great for all four shareholders."

The deal reflects the changing landscape of tobacco. Cameron acknowledged that customers have changing preferences and said Reynolds American plans to keep up.

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As part of that strategy, the company is now rolling out its new vapor cigarette, Vuse.

"Smokers are saying I'd like an alternative that may be better for me, and vapor is the closest thing to being able to have the ritual of smoking but not to be burning the tar," she said.

The CEO shrugged off the recent slowdown in e-cigarette sales, citing the recent proliferation of choices.

"A lot of things were launched in the last quarter," Cameron said. "Vuse is just starting to roll out, and we have proven where we test marketed in Colorado. We grew the vapor sector by threefold and got 70 percent share because Vuse actually works."

Reynolds American also recently lost a lawsuit brought by the family of a deceased smoker, with the jury accessing a $23.6 billion judgment. Reynolds American already has filed a motion with the court appealing the fine.

Read MoreBig tobacco's $23B award unlikely to stand: Experts

"We feel that this is grossly excessive and in fact we believe that it is not legal in the state Florida nor constitutionally, and that the court should and will set it aside," she said.

—By CNBC's Michelle Fox. Reuters contributed to this report.