Tobacco giants to merge US operations

British American Tobacco and RJ Reynolds Tobacco have agreed to merge their US tobacco businesses, uniting the nation’s second and third largest tobacco companies in an effort to blunt the attacks of sagging sales and cheaper brands.

British American Tobacco (BAT) is the parent company of rival Brown & Williamson Tobacco. The agreement comes a month after RJ Reynolds (RJR) trimmed 40% of its work force.