By Chad Bray
British American Tobacco said recently that its sweetened offer to buy the stake in Reynolds American that it did not already own had been accepted, a $49-billion deal that would create a tobacco giant with a significant presence around the world.
The purchase would create the world’s largest publicly traded tobacco business, based on net sales, and it would combine companies with brands that include Camel, Lucky Strike, Newport and Pall Mall. It comes as the industry faces a shift toward so-called next-generation products, or NGPs, such as e-cigarettes and vaping products.
The agreement came nearly three months after British American Tobacco first offered to buy the 57.8 percent of Reynolds American that it did not own, at the time offering about $47 billion.
“It will create a stronger, global tobacco and NGP business with direct access for our products across the most attractive markets in the world,” Nicandro Durante, the British American Tobacco chief executive, said in a news release. “We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future.”
Under its cash-and-share offer, British American Tobacco would pay $59.64 a share for Reynolds American, representing a 26% premium over the company’s closing price before the initial offer last October.
The boards of both companies will recommend that shareholders approve the transaction, the companies said. The deal is also subject to shareholder and regulatory approval. It is expected to close in the third quarter.
The deal values Reynolds American at $81 billion based on market capitalization.
“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.”
© 2017 The New York Times
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