At the price LO is at now, I had to buy in today. RAI would have to fall below $39 for me to begin to lose money which I don't see happening. Also I collect a 4% dividend. Essentially the only risk is that the government kills the deal in its current state. However, I think a deal can still be made between the three companies if the government wants more divestitures.
The .29 shares of RAI is worth $18 currently with RAI now at $60. So based on today's price you'll receive about $68 for your LO shares. If RAI is $80 a year from now, you get about $74 ($50.50 cash plus $24 worth of stock) in value for your LO shares. If RAI is $40, you get about $62 for your LO shares. This is the way I look at it.
Do you feel that the .2909 of RAI is worth $0? The "value" of a LO share today is $50.50 plus the value of .2909 of a RAI share [this ignores present value element of the cash]. So the question is what do you think RAI will trade at just before the deal is completely done.