US tobacco group RJ Reynolds, maker of Camel cigarettes, plans to merge its business Stateside with British American Tobacco's US unit Brown & Williamson, maker of the Lucky Strike brand.

The move combines the second and third-biggest cigarette manufacturers in the US. The new company will be called Reynolds American.

The companies expect the full integration will generate more than $500m in annual savings.

BAT's export product, currently produced by B&W, will be manufactured by RJR.

BAT will also retain the rights to use all its international trademarks outside the US.