Published On: Tue, Jan 17th, 2017

Tobacco Company Sold as British American Tobacco Buys Reynolds American

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Another billion dollar deal has taken place in the marketplace with British American Tobacco (NYSEMKT:BTI) offering $49 billion for Reynolds American company (NYSE:RAI) on Tuesday. The brand manufacturer of popular cigarettes like Camel, Newport, Lucky Strike and Pall Mall will now be part of the company with the highest tobacco sales in the world.

The British American Tobacco company already was part owner of Reynolds American and had previously offered $2 billion less for the remaining share they did not own. The company increased its offer for complete ownership which has been agreed to at this time. Breaking it down by share price, British American Tobacco will pay $59.64 per share of the Reynolds stock which is quite a premium over its latest close price. Reynolds shareholders will receive $29.44 in cash and 0.5260 BAT shares according to news released about the planned merger of the two companies.

Susan Cameron, former Reynolds American CEO said, “This combination will create a truly global tobacco company with multiple iconic tobacco brands, and a world-class pipeline of next-generation vapor and tobacco-heating products.”

The acquisition of the company comes at a time when e-cigarettes and vaping are among the most active areas of the respective market which has impacted sales of tobacco products.

Although the boards of both companies have approved the sale, it still must go in front of shareholders of the company for approval.


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