LONDON (AP) – British American Tobacco is offering to take over Reynolds American Inc. in a $47 billion deal that would create the world’s largest publicly traded tobacco company and try to make up for a decline in smoking in the U.S. and Europe.
With tobacco firms under pressure from health groups in developed economies and increasingly popular electronic cigarettes, a merger of this size would help them consolidate costs and resist competition from Asia, analysts say.
A deal would bring under one roof BAT’s brands including Dunhill, Rothmans and Kent with Reynolds’ Newport, Camel and Pall Mall, which are among the top four brands in the U.S.
BAT, which is based in London, offered Friday to buy the 57.8 percent of Reynolds it doesn’t already own for the equivalent of $56.50 per share, 20 percent more than Thursday’s closing price. Investors would receive $24.13 in cash and 0.5502 of a BAT share for each Reynolds share they own.
The deal values Reynolds, based in Winston Salem, North Carolina, at $93 billion.