Tags: British | American | Tobacco | Reynolds | Cigarettes

British American Tobacco Offers to Buy Reynolds in $47B Deal

British American Tobacco Offers to Buy Reynolds in $47B Deal

(Dollar Photo Club)

Friday, 21 October 2016 07:14 AM

British American Tobacco offered Friday to buy Reynolds American Inc. in a $47 billion cash-and-stock deal that would create the world's largest publicly traded tobacco company and bring together brands like Camel, Dunhill, and Newport.

The logic of the deal, analysts say, is to make up for a decline in smoking in the firms' home markets of the U.S. and Britain as they look to developing countries and new products, such as electronic cigarettes.

The London-based company offered to buy the 57.8 percent of Reynolds it doesn't already own for the equivalent of $56.50 per share, 20 percent more than Thursday's closing price. Investors would receive $24.13 in cash and 0.5502 of a BAT share for each Reynolds share they own.

The deal values Reynolds, based in Winston Salem, North Carolina, at $93 billion.

Shares in Reynolds jumped about 18 percent to $55.50 in premarket trading in New York, while BAT was up 2.8 percent to 49.39 pounds in London.

The deal would unite BAT's global operations with the second-largest tobacco company in the United States. While BAT sells Dunhill, Rothmans and Kent cigarettes around the world, Reynolds' Newport, Camel and Pall Mall are among the top four brands in the U.S.

The merger "is the logical progression in our relationship and offers all shareholders a stake in a stronger, truly global tobacco and next generation products company," BAT Chief Executive Nicandro Durante said, referring to the firms' expansion into electronic cigarettes.

The deal would give the new company a leading position in the United States and a greater presence in high-growth markets including South America, the Middle East, Asia and Africa.

Those developing countries are especially important as smoking habits weaken in Europe and the U.S., where pressure from health groups is stronger, analysts say.

"The markets in which these firms are the dominant players are declining, and they face ever increasing competition from Asia in seeking to develop new markets," said Nigel Driffield, professor of international business at Warwick Business School in England.

BAT said it had announced the offer before conducting any negotiations with Reynolds to comply with U.S. law. The deal would have to be approved by the independent directors of Reynolds and shareholders of both companies.

BAT employs more than 50,000 people globally and operates in 200 markets and has a portfolio of 200 brands.

© Copyright 2019 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

   
1Like our page
2Share
Companies
British American Tobacco offered Friday to buy Reynolds American Inc. in a $47 billion cash-and-stock deal that would create the world's largest publicly traded tobacco company and bring together brands like Camel, Dunhill, and Newport.
British, American, Tobacco, Reynolds, Cigarettes
390
2016-14-21
Friday, 21 October 2016 07:14 AM
Newsmax Media, Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved