British American Tobacco launches take-over of Reynolds

British American Tobacco launched a $47bn cash and shares take-over offer for the 57.8% of Reynolds American which it did not already own.

London-listed BAT had not held prior negotiations with Reynolds, the company said in a statement.

The offer valued Reynolds at $56.50 a share, for a 20% premium over the closing price of its shares on 20 October.

Combined, the two companies would enjoy a leading position in the US tobacco market and hold a significant presence in high-growth emerging markets across South America Africa, the Middle East and Asia.

BAT expected the transaction to be accretive to earnings in its first full-year.

Shareholders in Reynolds, other than BAT, would get $24.13 in cash and 0.5502 BAT shares for each of their Reynolds shares.

That meant that of the mooted $47bn bid price, $20bn would be paid in cash and the remainder in shares.

BAT's Chief Executive, Nicandro Durante, commented: "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."