British American Tobacco (BAT) said Friday it was seeking to buy a stake of 57.8 percent in Reynolds American for about $47 billion (43 billion euros). The cash-and-shares offer would see BAT purchase exactly the amount of remaining shares that it does not already own.

BAT bids $56.50 per Reynolds share - a 20-percent premium on Thursday's close - valuing the North Carolina-based company at around $93 billion.

London-listed BAT, which already holds 42.2 percent in Reynolds, said the transaction would give it a leading position in the US tobacco market and a significant presence inhigh growth emerging markets, together with the most attractive developed markets.

"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," said BAT chief executive Nicandro Durante.

The deal is set to create the world's largest listed tobacco company by net turnover and operating profit, BAT said in a statement. It will bring together BAT brands Dunhill, Kent and Lucky Strike cigarettes with Reynolds American's Camel and Newport.

Growth markets

Most global tobacco firms are looking to emerging markets to offset sliding demand in Western countries, where high taxes, public smoking bans and health concerns have persuaded many people to give up.

At the same time, there has been rapid growth in e-cigarettes in recent years, which are battery powered devices that heat a nicotine liquid.

Reynolds' 2015 purchase of US tobacco behemoth Lorillard, the manufacturer of the Blu e-cigarette, has strengthened the US group's profit, making it even more attractive. BAT said the combined group would have a "world class pipeline" of so-called next generation products, like e-cigarettes, in a fast-growing part of the market.     

Due to US securities laws, BAT was required to announce its proposal promptly after it was made to Reynolds management, and had therefore been unable to have prior negotiations regarding the deal.

 

uhe/jd (AFP, Reuters, dpa)