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British American Tobacco in $47bn Reynolds merger deal British American Tobacco plans $47bn Reynolds merger
(35 minutes later)
British American Tobacco (BAT) is to merge with its US partner Reynolds in a deal valued at $47bn (£38bn). British American Tobacco is planning to merge with its US partner Reynolds in a deal valued at $47bn (£38bn).
BAT wants to buy the 57.8% of Reynolds it does not already own.BAT wants to buy the 57.8% of Reynolds it does not already own.
The merger would bring together some of the tobacco industry's best-known brands, including Rothmans, Dunhill and Camel cigarettes.The merger would bring together some of the tobacco industry's best-known brands, including Rothmans, Dunhill and Camel cigarettes.
BAT has been a shareholder in Reynolds since 2004 and the company said the merger was "the logical progression in our relationship".BAT has been a shareholder in Reynolds since 2004 and the company said the merger was "the logical progression in our relationship".
The FTSE 100 company is offering $20bn in cash and $27bn in shares for the US business.
It estimates that it can make $400m worth of cost-savings through the merger, which includes assets such as Reynolds' production facility in Tobaccoville, North Carolina.
BAT has not yet held talks with Reynolds and said the merger would have to be approved by all the US company's independent directors.
BAT has held a significant stake in the company for 12 years after merging its US operations, known as Brown & Williamson, with RJ Reynolds. A new parent company was established at the time, of which BAT owns a 42.2% share.
RJ Reynolds has been operating since 1875 and is the second largest tobacco company in the US after Altria, which owns Philip Morris USA.
Last year, Reynolds completed its $25bn takeover of US rival Lorillard. The combined company was forced to sell off a number of brands, including Kool, Salem and Winston, to satisfy regulators. They were eventually bought by Britain's Imperial Tobacco for $7.1bn.