BAT preparing improved bid for Reynolds American

British American Tobacco was preparing to offer a higher price and possibly also a higher cash component for rival Reynolds American that same week, Bloomberg reported citing people familiar with the matter.

BAT, who was aiming to close a transaction by the end of the year, was unlikely to increase its initial offer by more than 5%, the same people said, although the company had not yet decided on a final amount.

In October, BAT had offered roughly $56.50 in cash and stock for each share Reynolds, an amount which at the time equated to about a 20% premium.

However, the drop in its share price since then meant the value of the offer had decreased to approximately $54.55.

As of 1517 GMT shares in BAT were down by 0.10% to 4,342.50p.