A smoking merger: British American Tobacco buys rival Reynolds for US$49 bln
Deal creates world’s biggest listed tobacco company with brands like Newport and Lucky Strike
British American Tobacco (BAT) has agreed a US$49.4 billion takeover of US rival Reynolds American Inc, creating the world’s biggest listed tobacco company after it increased an earlier offer by more than $2 billion.
BAT, which already owned 42 per cent of Reynolds, will pay $29.44 in cash and 0.5260 BAT shares for each Reynolds share, it said, a 26 per cent premium over the price of the stock on October 20, the day before BAT’s first offer was made public.
Reynolds, the maker of Camel and Newport cigarettes, rejected an initial approach in November, although the two sides remained in talks.
The deal, which values the whole of Reynolds at around $86 billion, will mark the return of BAT to the lucrative and highly regulated US market after a 12-year absence, making it the only tobacco giant with a leading presence in American and international markets.
BAT Chief Executive Nicandro Durante said bringing the two companies together would create a market leader with brands including Newport, Lucky Strike, Camel and Pall Mall.