Reynolds American Inc

Reynolds American, Inc. (NYSE:RAI) Reports Entry into Merger Deal With British American Tobacco

Reynolds American, Inc. (NYSE:RAI) has reached a deal with British American Tobacco under which latter will buy the 57.8% of company’s common stock that it does not presently own in cash and BAT shares showcasing 0.5260 of a BAT ordinary share.

The details

The per-share price shows a 26.4% premium to Reynolds American’s closing price as of October 20, the day prior to British American Tobacco’s public proposal to buy the outstanding shares that it doesn’t currently own. As per the terms of the deal, Reynolds American shareholders will obtain for each share of common stock they own, $29.44 per share in cash and a count of BAT stock representing 0.5260 of a British American ordinary share. RAI shareholders will get nearly 19% of the combined entity.

The deal has been accepted by the independent directors of Reynolds American who established a transaction committee to discuss with BAT, provided BAT’s current ownership stake and representation on company’s board of directors, and by both companies’ boards of directors.

Following the deal, the combined firms become a stronger, truly international tobacco and Next Generation Products firm, offering sustained long-term returns and profit growth. It will maintain an existence in both high-growth developing and profitable developed markets while getting together a complementary and compelling international portfolio of strong brands.

The firms combined next-gen product advancement and R&D capabilities will establish a unique pipeline of tobacco-heating and vapor products, offering an array of new product alternatives for adult tobacco consumers, and diversified sources of profit growth prospects for investors. Susan M. Cameron, the Executive Chairman of Reynolds’ Board of Directors, said that through this deal, they establish an industry leader that will emphasize on brand building and innovation.

This combination will present a truly global tobacco firm with numerous iconic tobacco brands, and a premium pipeline of next-gen vapor and tobacco-heating offerings.

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