Reynolds American is reported to have rejected the British American Tobacco sales offer as the company is said to be looking for a higher price.
Just last month, the British American Tobacco or BAT offered Reynolds American Inc. or RAI, the United States cigarette maker a $47 billion sum for a takeover of its remaining shares.
BAT already holds 42 percent of the American cigarette maker shares and the acquisition of the remaining ones could lead to the appearance of the world’s largest listed tobacco company.
The international cigarette maker has been a RAI shareholder ever since the latter’s creation back in 2004 and sees the takeover as a logical progression.
Nicandro Durante, the British American Tobacco chief executive declared last month, following the sales offer, that the company he represents has beneficiated from the RAI US growth.
According to the same Durante, a merger between the two companies would benefit all of the shareholders and possibly even current and future consumers.
He stated that uniting the two companies would lead to a larger, stronger global tobacco company that would also offer new, updated company products.
Reynolds America is the current producer of such cigarette products the likes of Camel and Newport whilst BAT owns and produces Kent, Dunhill, Rothmans, and Lucky Strike.
The current market leader and biggest market listed tobacco company is Philip Morris International. A merger of BAT and RAI, if it will happen, will probably see to its losing the current position.
The offer made by BAT to Reynolds American saw its acquisition of the remaining shares at a total value of $47 billion, divided as follows.
Out of the total sum value, a $20 billion would have been paid in cash and the remaining $27 billion would have been made up from British American Tobacco shares.
The offer, which was out on October 21, accounted for a $56.50 per share cash-and-stock value, which was 20 percent higher than the RAI closing share value on October 20.
The merger between the two companies is estimated to bring in $400 million in cost savings. According to analysts, the Reynolds American products could come to account for 50 percent of the BAT profits and an estimated 40 percent of its sales.
It would also lead to British American Tobacco being the sole tobacco giant company to feature in both the American and the International market. As such, Philip Morris International could seek to reunite with its United States affiliates.
Reportedly, the British American Tobacco is willing to continue negotiations with Reynolds American by slightly increasing its sales offer.
The Reynolds American Inc. share value closed on November 14, at $53.5 per share and registered a 1 percent decrease which remained unchanged even in the after-hours trading.
Still, the company’s shares saw a 15 percent share increase in value this year.
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