BAT makes US$47b of­fer for Reynolds

The Myanmar Times - - International Business -

BRI­TISH Amer­i­can To­bacco has launched a mas­sive US$47 bil­lion bid for full con­trol of Reynolds Amer­i­can, as it seeks ex­pan­sion into the US – the sec­ond-largest mar­ket af­ter China.

The deal for the 58 per­cent of Reynolds that BAT does not yet own would ce­ment its sta­tus as one of the world’s largest to­bacco com­pa­nies.

BAT said the move would give it “a leading po­si­tion in the US to­bacco mar­ket” as well as “a sig­nif­i­cant pres­ence in emerg­ing mar­kets”.

“The main rea­son for the deal is for BAT to be in the United States,” a com­pany spokesper­son told AFP, not­ing that the com­pany 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’ Camel and New­port.

The com­bined group would have a “world class pipe­line” of so-called next gen­er­a­tion prod­ucts like eci­garettes, in a fast-grow­ing part of the mar­ket, the state­ment said.

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, bat­tery­pow­ered de­vices that heat a ni­co­tine liq­uid.

The world’s big­gest cig­a­rette pro­ducer by mar­ket share is the sta­te­owned China Na­tional To­bacco Cor­po­ra­tion, fol­lowed by Marl­boro maker Philip Mor­ris.

Merged with Reynolds Amer­i­can, BAT would win some ground but re­main the third-big­gest player, ac­cord­ing to data-gath­erer Euromon­i­tor.

How­ever, BAT said it would be the big­gest listed to­bacco firm by net turnover and op­er­at­ing profit.

The deal val­ues the Win­stonSalem, North Carolina Reynolds at $93 bil­lion. BAT noted Reynolds’ 2015 pur­chase of Lo­ril­lard, the man­u­fac­turer of the Blu e-cig­a­rette, had “strength­ened” the US group. –

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