LONDON: British American Tobacco agreed Tuesday to pay almost $50 billion for control of US peer Reynolds American in a move which targets the lucrative United States market and the fast-growing e-cigarette sector.
BAT will purchase the 57.8-percent of Reynolds American that it does not already own, the group said, unveiling an improved cash-and-shares offer after Reynolds had rejected its previous $47-billion bid.
The deal brings together a raft of global brands, including BAT products Lucky Strike, Rothmans and Kent, and Reynolds’ brands such as Newport, Camel and Pall Mall.
The transaction will also create the world’s largest listed tobacco company with a strong foothold in the US, and a significant presence in high-growth markets including South America, the Middle East and Africa.
BAT added it would also create a “truly global” business for fast-growing next generation products (NGP) like e-cigarettes or vaping.
“We are very pleased to have reached an agreement with . . . Reynolds and we look forward to putting the recommended offer to shareholders,” said BAT Chief Executive Nicandro Durante in the statement.
He added that the blockbuster deal “will create a stronger, global tobacco and NGP business with direct access for our products across the most attractive markets in the world.”
“We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future.”
Reynolds shareholders will receive $29.44 in cash and 0.5260 BAT ordinary shares, under the terms of the transaction.
That represented an increase of 26 percent compared with the closing Reynolds share price on October 20—the day before BAT’s unsuccessful bid.