Shares in British American Tobacco (LON:BAT) have inched marginally lower as the company announced that it had inked a deal to acquire the remaining 57.8 percent of Camel cigarette maker Reynolds it does not already own. The $49.4-billion deal is set to create the world’s largest listed tobacco company by sales.
As of 10:16 GMT, BAT’s share price had lost 0.34 percent to 4,746.50p, largely in line with losses in the broader London market, with the benchmark FTSE 100 index currently 0.40 percent worse off at 7,298.11 points. The group’s shares have gained nearly 33 percent over the past year, as compared with about a 25-percent rise in the Footsie.
Dunhill and Lucky Strike owner BAT announced in a statement this morning that it had agreed the terms of a recommended offer which will see the FTSE 100 tobacco giant acquire the remaining 57.8 percent of Reynolds it does not already own for $29.44 in cash and 0.5260 BAT ordinary shares.
“We have been shareholders in Reynolds since 2004 and we have benefited from the success of the present management team’s strategy, including its acquisition of Lorillard, which we supported with our own investment in 2015,” the London-listed group’s chief executive Nicandro Durante commented in the statement. The Financial Times noted in its coverage of the news that the enlarged group will be the world’s biggest listed tobacco company by sales.
The newspaper pointed out that analysts had said that the deal would pave the way for further sector consolidation, with other large global tobacco groups eager to tap into the US, where low pack prices, a dominant e-cigarette market and waning worries about litigation costs are expected to drive growth.