BAT agrees to pay $49 billion to take over Reynolds.

After being in discussion for months, British American Tobacco (BAT

British American Tobacco company

BAT is a British multinational tobacco company that belongs to the top five worldwide largest tobacco companies. It has a market-leading position in more than 50 countries and distributes brands like Dunhill, Lucky Strike, Kent, Pall Mall, Kool, Benson&Hedges and Rothman.

“>BAT), and Reynolds American, have agreed on a price for the merger that will create the world’s largest Big Tobacco

Term commonly used to describe the main tobacco manufacturers which are Altria, British American Tobacco (BAT), Imperial Tobacco, Japan Tobacco (JTI), Philip Morris International (PMI) while China National Tobacco Co. is considered to be the largest by volume. See also Big Tobacco’s investments in tobacco harm reduction products.

“>big tobacco company.

The British company which has been a Reynolds shareholder for over a decade, said that the acquisition of this 57.8% of the stake, ”creates a stronger, truly global tobacco” business, adding, that this was “the logical progression in our relationship”.

BAT’s proposal

On the 20th of last October, BAT, who is the second-largest tobacco manufacturer in the United States, sent an acquisition proposal to RAI. This comprised of an offer of $20 billion in cash and about $47 billion in shares, for the acquisition of the remaining 57.8% in the company.

This merger is expected to save BAT $400 million, whilst bringing together some of the most popular cigarette brands such as Lucky Strike, Rothmans, Dunhill and Camel cigarettes.

However at the beginning of November Reynolds replied with a refusal of the initial offer, well aware that BAT, which already owned 42% of the company, would be willing to re-negotiate.

Now that the deal has been concluded, this merger is expected to save BAT $400 million, whilst bringing together some of the most popular cigarette brands such as Lucky Strike, Rothmans, Dunhill and Camel cigarettes.

The UK company which has also been extensively branching out to vaping products, owns over 200 brands, and last November even purchased major Polish vaping company, Chic, in a move that will ensure its presence in Eastern Europe. Subsequently the takeover of Reynolds will now also guarantee its presence in South America, the Middle East and Africa.

The creation of the world’s largest tobacco company

“Our combination with Reynolds will benefit from utilising the best talent from both organisations. It will create a stronger, global tobacco and NGP [new-generation products] business with direct access for our products across the most attractive markets in the world.” said BAT’s chief executive, Nicandro Durante.

“The sheer scale of the enlarged BAT raises the pressure on the remaining players to bulk up too, and attention is likely to turn to Imperial Brands, who look more and more like a minnow swimming in a tank of big, hungry fish.” Steve Clayton, Fund Manager at Hargreaves Lansdown.

While fund manager at Hargreaves Lansdown, Steve Clayton, said this was a big move that made sense, adding, “The sheer scale of the enlarged BAT raises the pressure on the remaining players to bulk up too, and attention is likely to turn to Imperial Brands, who look more and more like a minnow swimming in a tank of big, hungry fish.”

Source – The Vaping Post