Famous “British American Tobacco (BAT)” has agreed a $49.4 billion takeover of U.S. rival Reynolds American Inc, creating the world’s biggest listed tobacco company after it nudged up an earlier offer by more than $2 billion.
Reynolds, the maker of Camel and Newport cigarettes, rejected an initial approach in November, although the two sides remained in talks.
BAT Chief Executive Nicandro Durante said bringing the two companies together would create a market leader with brands including Newport, Lucky Strike, Camel and Pall Mall.
BAT owned 42 percent of Reynolds, will pay $29.44 in cash and 0.5260 BAT shares for each Reynolds share, it said, a 26 percent premium over the price of the stock on Oct. 20, the day before its first offer was made public.
Shares of Reynolds American jumped 3.34 percent in early Tuesday trade, hitting record highs. The company’s stock was also on track for its best one-day performance since Oct. 21.
The deal will mark the return of BAT to the lucrative and highly regulated U.S. market after a 12-year absence, making it the only tobacco giant with a leading presence in American and international markets.
BAT Chief Executive Nicandro Durante also said bringing the two companies together would drive “sustained profit growth and returns for shareholders”.
The U.S. tobacco market was the most profitable outside China, he said in an interview, and BAT “figured there was some room to grow there”.
“It will create a stronger, global tobacco and NGP (next generation products) business with direct access for our products across the most attractive markets in the world,” he said on Tuesday.