British American Tobacco's bid for Reynolds lights up tobacco stocks

British American Tobacco is hoping to muscle its way further into the US market by buying the 58% of Reynolds American that it doesn’t already own.

British American Tobacco is hoping to muscle its way further into the US market by buying the 58% of Reynolds American that it doesn't already own. BAT has offered cash and stock valued at $56.50 a share, a 20% premium to Reynolds' share price.

The deal, which would create the world's largest publicly listed tobacco company, is "the latest blockbuster consolidation attempt in big tobacco", say Arash Massoudi and James Fontanella-Khan in the Financial Times. Last year Imperial Tobacco acquired $7bn worth of US brands from Reynolds and Lorillard. This boosted its profits by 15%, offsetting falling sales elsewhere.

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Ben Judge

Ben studied modern languages at London University's Queen Mary College. After dabbling unhappily in local government finance for a while, he went to work for The Scotsman newspaper in Edinburgh. The launch of the paper's website, scotsman.com, in the early years of the dotcom craze, saw Ben move online to manage the Business and Motors channels before becoming deputy editor with responsibility for all aspects of online production for The Scotsman, Scotland on Sunday and the Edinburgh Evening News websites, along with the papers' Edinburgh Festivals website.

Ben joined MoneyWeek as website editor in 2008, just as the Great Financial Crisis was brewing. He has written extensively for the website and magazine, with a particular emphasis on alternative finance and fintech, including blockchain and bitcoin. 

As an early adopter of bitcoin, Ben bought when the price was under $200, but went on to spend it all on foolish fripperies.