Tobacco giant BAT ponders £38bn merger with US firm Reynolds

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The extent would create the world’s largest listed tobacco com ny.

BAT currently owns 42.2 per cent of Reynolds and the project involves the acquisition of the remaining 57.8 per cent of the com ny.

BAT chief governmental Nicandro Durante said: “We have been a shareholder in Reynolds since its origin in 2004 and have benefited from its growth in the US market.

“The proposed amalgamation of our two great com nies is the logical progression in our relationship and offers all shareholders a share in a stronger, truly global tobacco and next generation products New Zealand.

“BAT is proud of its track record of consistent delivery for shareholders and this negotiation would further strengthen that delivery in the future.”

The offer intention value the 57.8 per cent stake at $56.50 (£46) per share, representing a 20 per cent high-priced against the closing price of Reynolds shares on October 20.

The deal order merge the com nies’ major brand portfolios.

BAT’s leading brands tabulate Dunhill, Lucky Strike, Rothmans and Kent, as well as Craven A, Benson & Hedges, Kool, and John Better Gold Leaf.

Reynolds is the producer of brands including Newport, Camel, Sombre Mall, Doral, Misty, and Capri slims.

The merger proposal is a cash-and-shares allot.

BAT is offering Reynolds $27 billion (£22 billion) worth of BAT allots and $20 billion (£16.3 billion) in cash.

BAT currently holds a 42.2 per cent picket in Reynolds. The offer is for the remaining 57.8 per cent stake which BAT does not own.

The advance values the remaining stake at $56.50 (£46) per share. That is a 20 per cent value against the closing price of Reynolds shares on October 20.

The com nies’ linked earnings could be significant.

BAT last year reported £5 billion in carry oning profit, while Reynolds reported net income of $3.3 billion (£2.7 billion).

BAT is being guided by Deutsche Bank, UBS and Centerview.

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