Tobacco giant BAT pays US$49.4b for control of US firm Reynolds

[LONDON] British American Tobacco agreed Tuesday to pay almost US$50 billion for control of US firm Reynolds American, creating the world's largest listed tobacco company.

BAT, which already owned 42 per cent of Reynolds, will pay US$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 Oct 20, the day before its first offer was made public.

The Camel and Newport cigarette maker rejected the approach a month later, according to sources, although the two sides remained in talks.

The maker of Lucky Strike and Rothmans cigarettes will purchase the 57.8-per cent of Reynolds American that it does not already own, BAT said in a statement.

The deal 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 drive "sustained profit growth and returns for shareholders".

"It will create a stronger, global tobacco and NGP (next generation products) business with direct access for our products across the most attractive markets in the world," he said on Tuesday.

AFP/Reuters