British American Tobacco PLC agreed to take full control of Reynolds American Inc. in a $49.4 billion deal that marks renewed interest among international players in the U.S. tobacco market.

BAT, which already owned 42.2% of Reynolds before Tuesday’s announcement, said it saw the U.S. as the largest tobacco profit pool outside of China—with affordable pack prices, high disposable income and a burgeoning market for e-cigarettes and... </s> Oct 21 British American Tobacco has offered to buy U.S. tobacco company Reynolds American Inc in a $47 billion deal bringing together Newport, Kent and Pall Mall cigarettes to create the U.S. market leader.

The British group, which has a 42 percent stake in Reynolds, said its offer valued the company's shares at $56.50, of which $24.13 would be in cash and $32.37 would be in BAT shares, representing a premium of 20 percent over the closing price of Reynolds common stock on Oct. 20.

The total consideration for the remaining 57.8 percent of Reynolds would be $47 billion, of which approximately $20 billion would be in cash and $27 billion in BAT shares, it said on Friday. (Reporting by Paul Sandle; editing by Susan Thomas) </s> British American Tobacco Plc has agreed to fully take over Reynolds American Inc. on terms that are improved from an initial bid made last year. The takeover would create the world's largest publicly traded tobacco company and combine BAT's presence in developing countries, where anti-smoking campaigns are not as strong as in the U.S. and Europe, with Reynolds' almost exclusive focus on the U.S. BAT said Tuesday it will buy the 57.8 percent of Reynolds it does not already own.

Start the conversation, or Read more at The Daily News-Record. </s> British American Tobacco has agreed the terms of a $49.4bn deal for control of US rival Reynolds, creating the largest listed tobacco firm. The UK company has been in talks with Reynolds for months about buying the 57.8% stake it does not already own.

Start the conversation, or Read more at BBC News. </s> Jan. 17 (UPI) — British American Tobacco announced it will buy out other Reynolds American shareholders for $48 billion, taking full control of the company and creating the world’s largest publicly traded tobacco company.

Three months ago, BAT offered to buy the remainder of Reynolds American for $47 billion. The deal values Reynolds American at $79.8 billion, based on market capitalization, and BAT at $107.4 billion.

“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,” Nicandro Durante, the BAT chief executive, said in a news release. “We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future.”

The London company has been a part owner of Reynolds since 2004.

“We look forward to bringing together the two companies’ highly complementary cultures and shared commitment to innovation and transformation in our industry,” Debra A. Crew, the Reynolds American president and chief executive, said in a news release. “British American Tobacco is the best partner for Reynolds American’s next phase of growth, and together the two companies will create the leading portfolio of tobacco and next-generation products for adult tobacco consumers.”

British American Tobacco, based in London, would pay $59.64 a share for Reynolds American — a 26 percent premium over the company’s closing price before the initial offer.

Reynolds, with headquarters in Winston-Salem, N.C., has a 34 percent cigarette market share, with Newport the leading brand in menthol; Pall Mall the leading value brand and Natural American Spirit the fastest-growing premium brand, according to the company. Reynolds’ American Snuff subsidiary also has a 33 percent share of the growing moist snuff segment, led by Grizzly. Its Camel brand was introduced in 1913.

Reynolds had before-tax profits of $6.4 billion in 2015. The company has 4,000 employees. and is the No. 2 cigarette maker in the United States behind Philip Morris.

BAT employs more than 50,000 people worldwide and has more than 200 brands in its portfolio. It generated $6.2 billion adjusted profit in 2015.

More than a decade ago, British American Tobacco merged its Brown & Williamson operations in the United States with R.J. Reynolds.

BAT shares were down 0.3 percent to $57.25 in Tuesday trading in London after rising earlier. Reynolds shares were up 4 percent to $55.97 in pre-market trading in the United States.

The deal is subject to $1 billion breakup by either company should its board fail to recommend the transaction to shareholders or withdraw its recommendation. BAT might be required to pay a $500 million breakup fee if there are antitrust authorities. </s> LONDON — British American Tobacco has offered to buy out Reynolds American Inc. for $47 billion in an attempt to gain a strong presence in the U.S., a lucrative market where sales of electronic cigarettes are booming as traditional smoking fades.

The takeover would create the world’s largest publicly traded tobacco company and combine BAT’s presence in developing countries, where anti-smoking campaigns are not as strong as in the U.S. and Europe, with Reynolds’ almost exclusive focus on the U.S.

BAT already owns 42 percent of Reynolds and sells Dunhill, Rothmans and Lucky Strike cigarettes. Reynolds controls about a third of the U.S. market with brands like Newport, Camel and Pall Mall.

Though smoking in the U.S. is declining, it remains “the largest global profit pool” outside of China, BAT said in a statement Friday. The U.S. is one of the biggest markets for e-cigarettes.

“BAT and Reynolds American have a strong existing relationship, and while cost savings will be relatively modest, the full access this acquisition would give BAT to the U.S. — a lucrative, consolidated market with high barriers to entry — means it makes eminent sense,” Shane MacGuill, head of tobacco at Euromonitor International, said by e-mail.

The British company offered Friday to buy the Reynolds shares it doesn’t already own for the equivalent of $56.50 each, 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. That values Reynolds, based in Winston Salem, North Carolina, at $93 billion.

Reynolds shares jumped 13.5 percent to $53.50 in in New York, while BAT edged down 0.3 percent to 47.88 pounds in London.

The deal is the latest attempted merger in the industry as tobacco companies face weakening demand in developed markets. Only last year, Reynolds American acquired Lorillard, the maker of Newport, the U.S.’s best-selling menthol cigarette brand.

Reynolds traces its roots to 1875, when Richard Joshua Reynolds started a chewing tobacco company in what was then Winston, North Carolina. The company’s links with British American Tobacco date to 2004, when R.J. Reynolds Tobacco Co. merged with BAT’s Brown & Williamson unit, creating Reynolds American. BAT was left with a 42 percent stake in the new company.

The two companies already have a technology-sharing agreement in the development of electronic cigarettes.

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,” Chief Executive Nicandro Durante said in a statement.

Reynolds said in a statement that it will evaluate the offer.

Tobacco companies are particularly keen to expand in developing countries to make up for weaker sales in Europe and the U.S. The industry has been grappling with widespread anti-smoking campaigns that have forced companies like BAT and Reynolds to diversify into nicotine replacements and e-cigarettes to meet consumer health concerns.

It also comes only months after Britain instituted plain packaging rules for cigarettes. The idea is to dampen the allure of cigarettes created by advertising and prevent a new generation from taking up the habit.

Reynolds warned in a 2016 filing that if its companies “are not able to develop, produce or market new alternative products profitably, the results of operations, cash flows and financial positions … could be adversely affected.”

“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.

Asian tobacco companies face less public pressure over increasing sales in developing markets, where public health regulation may not be as strict, he said.

But the U.S. remains an important market. Owen Bennett, an equity analyst at Jefferies International, underscored that the United States currently accounts for 45 percent of global sales of e-cigarettes, also known as vapor cigarettes.

“If vapor accelerates as we expect, then the U.S. is the place to be,” he said. “The deal would also give BAT the best exposure to global e-vapor development.”

BAT employs more than 50,000 people globally while Reynolds employs 5,700, mostly in the U.S.

The planned merger would create a company likely to overtake Philip Morris International Inc. as the world’s biggest publicly traded tobacco company. But China’s National Tobacco Corp. is bigger than BAT and Reynolds both combined, Euromonitor International data showed.

BAT, founded in 1902, sold 663 billion cigarettes in more than 200 countries last year and generated revenue of 13.1 billion pounds ($16 billion). Reynolds shipped 76 billion cigarettes last year and reported sales of $10.7 billion. </s> British American Tobacco Plc has agreed to fully take over Reynolds American Inc. in a deal that will create the world's largest publicly traded tobacco company.

The $49 billion takeover was agreed on improved terms compared with an initial bid made last year. It would combine BAT's presence in developing countries, where anti-smoking campaigns are not as strong as in the U.S. and Europe, with Reynolds' almost exclusive focus on the U.S.

BAT sells Dunhill, Rothmans and Lucky Strike cigarettes, while Reynolds owns brands like Newport, Camel and Pall Mall.



 "Our combination with Reynolds will benefit from utilizing the best talent from both organizations," BAT's chief executive, Nicandro Durante, said in a statement Tuesday. "It will create a stronger, global tobacco and (next generation products) business with direct access for our products across the most attractive markets in the world."

London-headquartered BAT will buy the 57.8 percent of Reynolds it does not already own. Reynolds shareholders will receive for each share $29.44 in cash and 0.5260 BAT shares.

That values Reynolds, which is based in Winston Salem, North Carolina, at $59.64 per share, or $49.4 billion for the stake to be acquired, BAT says.

"This is a big move, that makes a lot of sense for BAT," said Steve Clayton, a fund manager a financial services firm Hargreaves Lansdown. "They already had billions tied up in Reynolds, now they will have billions more, but with full control of the company and its cash flows. The United States is an attractive market, with good pricing dynamics, and BAT can also take Reynolds' portfolio of new generation tobacco products and sell them worldwide."

Reynolds traces its roots to 1875, when Richard Joshua Reynolds started a chewing tobacco company in what was then Winston, North Carolina. The company's links with British American Tobacco date to 2004, when R.J. Reynolds Tobacco Co. merged with BAT's Brown & Williamson unit, creating Reynolds American. BAT was left with a 42 percent stake in the new company.

The two companies already have a technology-sharing agreement in the development of electronic cigarettes. </s> British American Tobacco (BAT) raised its bid for Reynolds by 5.6% on Tuesday, turning the deal from a potentially hostile takeover into a friendly one.

The cash component of British American Tobacco’s offer has been lifted to $29.44 from $24.13, but the share component has been reduced to 0.5260 from 0.5502 British American Tobacco shares per Reynolds share.

British American Tobacco said this raised its bid to $59.64 from $56.50 per Reynolds share.

Reynolds’s share price rose 0.41% to $55.97 in New York while British American Tobacco rose 0.34% R784.99 on the JSE following the announcement.

British American Tobacco first announced its intention to buy the 57.8% of Reynolds it does not already own on October 21.

Its initial offer was reportedly rejected by Reynolds’s largest shareholders.

British American Tobacco said in Tuesday’s statement that the new offer was unanimously approved by a transaction committee of independent Reynolds directors.

At current share prices, British American Tobacco will pay $49.4bn to buy the remaining 57.8% of Reynolds.

Reasons given for the deal included "at least $400m of annualised cost synergies anticipated by the end of year three, supporting continued margin improvement".

"We have been shareholders in Reynolds since 2004 and we have benefited from the success of the present management team’s strategy, including its acquisition of Lorillard, which we supported with our own investment in 2015," British American Tobacco CEO Nicandro Durante said.

Reynolds was the second-largest player in the US market, with three out of the four top-selling cigarette brands, British American Tobacco said.

"Reynolds has a 34% cigarette market share, with Newport the leading brand in menthol, Pall Mall the leading value brand and Natural American Spirit, the fastest-growing premium brand. Reynolds’ American Snuff subsidiary also has a 33% share of the growing moist snuff segment, led by its Grizzly brand," the company said. </s> British American Tobacco Plc (NYSEMKT: ) has agreed to acquire Reynolds American, Inc. (NYSE: ).

Two of the world’s largest tobacco companies are joining forces, creating a behemoth of a corporation that will include Camel, Lucky Strike, Newport, Kent and other brands under the same company.

The merger makes sense as traditional tobacco companies are facing a reduction in their business due to the rise of vaping and e-cigarettes. British American Tobacco already owned a stake of Reynolds American and initially offered $47 billion for the remaining 57.8% of the company.

The new company will be “stronger,” according to British American Tobacco CEO Nicandro Durante, who said the move will offer customers direct access to products from both companies. “We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future,” he added.

The combined company will result in annual savings of about $400 million. Reynolds American CEO Susan Cameron also praised the move as the new British American Tobacco will have a strong presence of traditional tobacco products, as well as vapor and tobacco-heating products.

Reynolds alone has a 34% of the cigarette share in the U.S., while the combined company has a large presence around the world, including the Middle East, South America, Africa and Asia.

BTI shares fell 2.1% Tuesday, while RAI stock gained 3% on the news.
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British American Tobacco agrees to take over the R. J. Reynolds Tobacco Company for $49.4 billion.