LONDON: British American Tobacco is planning to merge with its US partner Reynolds in a deal valued at $47bn (£38bn). BAT wants to buy the 57.8% of Reynolds it does not already own.
The merger would bring together some of the tobacco industry’s best-known brands, including Lucky Strike, Rothmans, Dunhill and Camel cigarettes. BAT has been a shareholder in Reynolds since 2004 and the company said the merger was “the logical progression in our relationship”.
The FTSE 100 company is offering $20bn in cash and $27bn in shares for the US business. This values Reynolds at $56.50 a share, compared to its closing price of $47.17 on Thursday. BAT estimates that it can make $400m worth of cost-savings through the merger, which includes assets such as Reynolds’ production facility in Tobaccoville, North Carolina.
