March 3 (Reuters) - A Delaware judge on Monday ordered

ITG Brands to pay rival cigarette maker Reynolds American $251.5

million in connection with a Florida tobacco settlement,

following ITG's purchase of four cigarette brands from Reynolds

a decade ago.

Vice Chancellor Lori Will of the Delaware Chancery Court

rejected ITG's argument that the $251.5 million, the full amount

Reynolds sought, be reduced by money Reynolds saved because ITG

did not join the Florida settlement.

Reynolds is a unit of British American Tobacco ( BTI ),

while ITG is a unit of Britain's Imperial Brands ( IMBBF ).

The case arose from Reynolds' June 2015 sale of the Kool,

Maverick, Salem and Winston brands to ITG, so Reynolds could win

regulatory approval for its $25.8 billion purchase of smaller

rival Lorillard.

Before the sale, Reynolds had for many years made annual

payments to Florida under a settlement to recoup tobacco-related

healthcare costs, after the state accused cigarette makers of

misrepresenting the addictiveness and health risks of smoking.

But after the sale closed, Reynolds stopped making payments

that had been based on sales of the four brands it no longer

owned.

Florida then sued Reynolds and ITG, and obtained a judgment

requiring Reynolds to make payments unless and until ITG joined

the settlement.

Reynolds paid Florida $251.5 million attributable to the

four brands for 2015 to 2023.

Will in October 2022 found ITG liable to reimburse Reynolds,

leaving the question of how much to pay.

In Monday's decision, Will said it would be "perverse" to

reduce ITG's liability by the estimated $112.8 million of

"profit adjustment" payments that Reynolds saved because ITG did

not join the Florida settlement.

"To reduce Reynolds' damages as though ITG joined the

Florida settlement agreement would disincentive ITG from ever

doing so," Will wrote.

The companies and their lawyers did not immediately respond

to requests for comment. Reynolds is based in Winston-Salem,

North Carolina, and ITG is based in Greensboro, North Carolina.