Bri­tish Amer­i­can To­bacco/Reynolds: smokin’ deal

The Week Middle East - - Business -

“Just as ev­ery­one was ex­pect­ing a mega Amer­i­can of­fer for one of the FTSE 100 gi­ants, along comes a deal in the op­po­site di­rec­tion,” said Alex Brum­mer in the Daily Mail. Bri­tish Amer­i­can To­bacco – a “much-loved stock for in­vestors with­out scru­ples” – has bid £38bn for the 58% of North Carolina-based R.J. Reynolds that it doesn’t al­ready own. The main ben­e­fit of the deal for BAT, which owns the Roth­mans and Lucky Strike brands, is the ex­tra mar­ket share it will grab in the US where Reynolds (home town Tobac­cov­ille) sells Camel, New­port and Pall Mall. But BAT’s Brazil­ian boss, Ni­can­dro Du­rante, is also hop­ing to es­tab­lish the brands more deeply in emerg­ing mar­kets, “with Brazil as a strong­hold”. And if the deal goes ahead (US anti-trust au­thor­i­ties will want to take a look), it will give him a good spring­board, said Iain Dey in The Sun­day Times. The “en­larged BAT” would be­come the sec­ond or third-largest com­pany in the FTSE 100 – and the world’s largest to­bacco firm. “None of this fits the nar­ra­tive of weak­ened Bri­tish titans be­ing stolen on the cheap.” Ad­mit­tedly, BAT may need “to cough up a lit­tle more to get the deal over the line”, but the mar­ket seems op­ti­mistic it will hap­pen.

Newspapers in English

Newspapers from UAE

© PressReader. All rights reserved.