British American Tobacco on Friday launched a vast $47-billion bid for full control of Reynolds American, as it seeks expansion into the United States - the second largest market after China. The deal, worth the equivalent of 43 billion euros for around 60 percent of Reynolds that BAT does not yet own, would cement its status as one of the world's largest tobacco companies.
The news sent BAT's share price more than three percent higher in late morning deals on the London stock market. BAT said the move would give it "a leading position in the US tobacco market" and "a significant presence in high growth emerging markets across South America, Africa, the Middle East and Asia, together with the most attractive developed markets".
"The main reason for the deal is for BAT to be in the United States," a company spokeswoman told AFP, noting that BAT did not have a direct presence there. She added that building on the popularity of e-cigarettes was also a "motivation" behind the deal. The blockbuster proposal would bring together BAT brands Dunhill, Kent and Lucky Strike cigarettes with Reynolds American's Camel and Newport. The combined group would have a "world class pipeline" of so-called next generation products like e-cigarettes, in a fast-growing part of the market, the statement added.
Most global tobacco firms are looking to emerging markets to offset sliding demand in Western Europe, where high taxes, public smoking bans and health concerns have persuaded many people to give up or turn to e-cigarettes - or battery powered devices that heat a nicotine liquid. Half of BAT's sales are in developed nations and the rest in emerging markets. "We are not concerned by the decrease in tobacco consumption in developed countries as the consumption is rising on a global scale," the spokeswoman added.
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