LONDON--British American Tobacco has agreed a $49.4 billion takeover of U.S. 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 percent of Reynolds, will pay $29.44 in cash and 0.5260 BAT shares for each Reynolds share, it said, a 26 percent premium over the price of the stock on Oct. 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 U.S. 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. "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.
The U.S. tobacco market was the most profitable outside China, he said in an interview, and BAT "figured there was some room to grow there."
"We expect the great majority of Reynolds jobs to stay in tack," said Susan M. Cameron, executive chairman of Reynolds American's board of directors. She said while some jobs would be eliminated because Reynolds is going from a publicly traded company to a subsidiary, there might be job creation in the United States. President-elect Donald Trump has repeatedly singled out and criticized U.S. companies for not doing more to keep jobs in the United States.
