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British American Tobacco plans $47bn Reynolds merger | |
(35 minutes later) | |
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. |