BAT offers $47 billion deal to takeover remaining stake in Reynolds American Inc

Published On : Oct 24, 2016

British American Tobacco PLC made a $47 billion offer to buy the rest of stake, approximately 58%, of Reynolds American Inc. that it doesn't already own. The British multinational tobacco company already owns 42.2% stacks of world’s second-largest tobacco company Reynolds American Inc. BAT offer the value of remaining share to buy per share – $24.13 in cash and $32.37 in BAT Shares.

According to BAT Chief Executive Officer Nicandro Durante, “this agreement would create the world’s major openly operated tobacco company deal, and we have benefited from its progress in the US market”. The proposed merger “is the logical development in our association and offers all Stockholders a stake in a stronger, honestly international tobacco and next generation goods company”. This is one of the biggest foreign deal by a British company in the last decade, and also in US market. After Brexit, this deal is sure to create brouhaha among analysts and industry watchers. Reynolds American Inc. has so far not responded to the offer.

BAT has a market-leading spot in 50 nations and set-ups in around 180 countries. In 2004 BAT merged with the Reynolds Tobacco Company by acquiring a 42% stakes of RAI. In 2006, both these companies announced that it would be manufacturing Camel brand suns in Sweden. The cigarette brand Pall Mall is a current combined manufacturing product of BAT and RAI.

BAT has in recent years dedicated to international markets such as Russia, Ukraine, Vietnam, Turkey and Bangladesh where the cigarette smoker are progressively choosing the premium cigarettes brands of British American Tobacco, such as Dunhill, Rothmans, Pall Mall and Lucky Strike. The cigarette brands of Reynolds American Inc. like Newport, Pall Mall, and Camel are amongst the top four brands in the United States.

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