Japan Tobacco is to acquire the UK-listed tobacco giant Gallaher Group for £7.5bn, in what will be the country's largest ever foreign takeover. 

JT will pay 1,140 pence-per-share in cash for the group, with financing from Merrill Lynch. The deal represents a premium of 27 percent on Gallaher's closing share price prior to the announcement of takeover discussions.

Headquartered in Weybridge, UK, Gallaher's brands include Benson & Hedges, Silk Cut and Mayfair which are sold in Europe, the Commonwealth of Independent States, Africa and Asia. The group employs over 12,000 people and sold 174 billion cigaretters during 2005. 

The formerly state-owned Japan Tobacco is the world's third-largest tobacco manufacturer, with brands such as Camel and Mild Seven. The Gallaher acquisition will increase JT's market share in Europe from 10 per cent to around 23 per cent according to the Nihon Keizai newspaper, and bolster sales in Russia.