British American Tobacco and Reynolds American Inc have agreed the terms of a recommended offer for BAT to acquire the remaining 57.8% of Reynolds it does not already own.
The transaction has been unanimously approved by the transaction committee of independent Reynolds directors established to evaluate the BAT offer.
The transaction has also been approved by the boards of Reynolds and BAT.
Reynolds shareholders will receive for each Reynolds share $29.44 in cash and 0.5260 BAT ordinary shares which shall be represented by BAT American Depository Receipts (ADRs) listed on the New York Stock Exchange.
Based on BAT’s share price and the dollar-sterling exchange rate as at market close on 16 January, this implies a total current value of $59.64 per Reynolds share and a total current value of approximately $49.4 billion for the 57.8% of Reynolds not already owned by BAT.
This represents a premium of 26% over the closing price of Reynolds common stock on 20 October 2016 (the last day prior to BAT’s announcement of a proposal to merge with Reynolds).
BAT’s Chief Executive, Nicandro Durante commented: “We are very pleased to have reached an agreement with the Transaction Committee and Board of Reynolds and we look forward to putting the recommended offer to shareholders. We have been shareholders in Reynolds since 2004 and we have benefited from the success of the present management team’s strategy, including its acquisition of Lorillard, which we supported with our own investment in 2015. BAT has consistently executed a winning strategy and has a proven track record of delivering strong results and returns for its shareholders while successfully investing for future growth. Our combination with Reynolds will benefit from utilising the best talent from both organisations. It will create a stronger, global tobacco and NGP business with direct access for our products across the most attractive markets in the world. We believe this will drive continued, sustainable profit growth and returns for shareholders long into the future.”
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