British American Tobacco, Reynolds American Agree On $49 Billion Merger

British American Tobacco (BTI) agreed to buy the rest of Reynolds American (RAI) that it did not own for $49.4 billion, creating the world’s biggest publicly traded tobacco maker.

BAT, which already owned about 42% of Reynolds, will pay $29.44 cash and BAT stock currently worth about $30.20, for each Reynolds share, for a total of $59.64. That’s a modest bump over Reynolds’ 55.97 close on Friday but a 26% premium over Reynolds’ stock price on Oct. 20, just before BAT’s first offer.

BAT shares sank 1.8% to 113.10 on the stock market today. Reynolds climbed 3.1% to 57.68.

The maker of Camel and Newport cigarettes reportedly rejected the initial offer, but talks continued, with BAT ultimately raising its bid by about $2 billion. The takeover values Reynolds at $86 billion.

The combined tobacco giant will be the only major industry player with big market share in both the U.S. and overseas.

Marlboro maker Altria Group (MO) split off Philip Morris International (PM) back in 2008. Altria stock climbed 1.3%. Philip Morris International rose 2.2%, moving above its 50-day line, which has served as resistance since late September.


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