British American Tobacco Agrees to Acquire Reynolds American

Companies expect the more than $49 billion deal to close in the third quarter

LONDON & WINSTON-SALEM, N.C. -- British American Tobacco PLC and Reynolds American Inc. have agreed to the terms of a deal for BAT to acquire the remaining 57.8% of Reynolds that it does not already own for $49.4 billion.

For each Reynolds share, Reynolds shareholders will receive $29.44 in cash and 0.5260 BAT ordinary shares. This represents a premium of 26% over the closing price of Reynolds common stock on Oct. 20, 2016, the last day prior to BAT’s announcement of a proposal to merge with Reynolds.

The combined company will provide a balanced presence in emerging and developed markets, with direct access to the U.S. market.

And it will create a portfolio of global brands, bringing together ownership of Newport, Kent and Pall Mall, and a global next-generation products (NGP) business with a pipeline of vapor and tobacco heating products.

The transaction has been unanimously approved by the transaction committee of independent Reynolds directors established to evaluate the BAT offer. The transaction also has been approved by the Reynolds and BAT boards.

The companies have agreed that three of the non-BAT nominated Reynolds directors will join the board of BAT when the deal closes.

The parties expect the transaction to close during third-quarter 2017.

BAT or Reynolds will pay a $1 billion breakup fee under certain circumstances. If the companies do not obtain certain antitrust approvals or BAT does not accept conditional antitrust approvals, it must pay an antitrust breakup fee of $500 million to Reynolds instead of the $1 billion breakup fee.

Winston-Salem, N.C.-based Reynolds American Inc. is the parent company of R.J. Reynolds Tobacco Co.; Santa Fe Natural Tobacco Co. Inc.; American Snuff Co. LLC; Niconovum USA Inc.; Niconovum AB; and R.J. Reynolds Vapor Co. U.S. cigarette brands include Newport, Camel, Pall Mall and Santa Fe; smokeless tobacco brands include Grizzly and Kodiak; and electronic cigarette brands include Vuse.

London-based BAT is a global tobacco group with more than 200 brands sold in more than 200 markets. International cigarette brands include Dunhill, Kent, Lucky Strike, Pall Mall and Rothmans.

Watch for details in CSP Daily News.

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