British American Tobacco plans $47bn merger with US firm Reynolds

Mon, 24 Oct 2016 | MERGER

British American Tobacco (BAT) plans to merge with its US partner Reynolds to create the biggest tobacco firm in the world in a deal valued at $47 billion (£38 billion).

BAT, whose brands include Dunhill and Lucky Strike, already owns 42.2 per cent of Reynolds and wants to buy the remainder of the company.

Reynolds is the second-largest tobacco firm in America. Its cigarette brands include Newport, Camel and Pall Mall.

FTSE 100-listed BAT is offering $20 billion (£16 billion) in cash and $27 billion (£22 billion) in shares for the US business, valuing it at $56.50 (£46) a share.

Last year, Reynolds acquired US tobacco firm Lorillard for $25 billion (£20 billion), strengthening its position as a leading American cigarette brand.

BAT’s move has surprised some analysts, who didn’t expect a UK firm to be so bold post-Brexit.

Dominic O'Connell, a business presenter on the BBC Radio 4’s Today programme, said: “This is the biggest foreign deal by a British company in recent years, and flies in the face of the prevailing, post-Brexit wisdom that a weak pound would stop British companies buying foreign rivals.”

If combined, the company would be the world’s largest listed tobacco firm by turnover and operating profit.

Nicandro Durante, BAT chief executive, said: “We have been a shareholder in Reynolds since its creation in 2004 and have benefited from its growth in the US market. The acquisition of Lorillard in 2015 has further strengthened Reynolds’s business. The proposed merger of our two great companies is the logical progression in our relationship and offers all shareholders a stake in a stronger, truly global tobacco and Next Generation Products company.

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


Share this article



Latest Businesses for Sale

Consulting Engineers Focused on the Built Environment
London, UK

Unusual opportunity to acquire this national and well established, full service Mechanical & Electrical consulting engineering company. Offers invited.

Asking Price: £2,700,000
Turnover: £5,800,000

LEASEHOLD


Freight Brokerage Services
UK Wide

Works with a network of reliable hauliers to provide comprehensive and reliable logistics solutions on a national basis. Offers invited.

Asking Price: Offers Invited
Turnover: £420,000

RELOCATABLE


Food Manufacturer Specialising Flatbread Products
North of England, UK Wide

Has established a prominent position with clients in its industry due to its prestigious portfolio. Operates from two leasehold premises. Offers invited.

Asking Price: Offers Invited
Turnover: £671,000

LEASEHOLD



View more businesses for sale

News Search

Latest News

 
23
 
May
 

Fintech company Loot collapses into administration | ADMINISTRATION

After failing to secure further backing from the Royal Bank ...

 
22
 
May
 

Spike in M&A activity in the education sector | BUSINESS SALE

In recent months, the education sector in the UK has witness...

 
22
 
May
 

Jamie Oliver restaurant empire collapses into administration | ADMINISTRATION

Celebrity chef Jamie Oliver, who shot to fame after campaign...

Free guide: 10 Biggest Buyer Mistakes

Sign up to receive our acquisition alert emails to get your FREE guide

Email


Want access to the latest businesses for sale?

Business Sale Report is your complete solution to finding great acquisition opportunities.

Join today to receive:

  • Comprehensive range of businesses for sale
  • Make direct contact with business sellers or their intermediaries
  • Access to all UK administrations, liquidations and winding-up petitions
  • Daily email alerts for the latest businesses for sale & distressed notifications
  • Business Sale Report publication posted to you every month
  • Advertise your acquisition requirements on our "business wanted" section

All this and much more, including the latest M&A news and exclusive resources