LONDON: British American Tobacco is offering to buy Reynolds American Inc. in a $47 billion deal that would create the world’s largest publicly traded tobacco company and attempt to make up for a decline in smoking in the US and Europe.
With tobacco firms under pressure from health groups in developed economies and increasingly popular electronic cigarettes, a merger of this size would help them consolidate costs and resist competition from Asia, analysts say.
BAT, which is based in London and owns brands like Dunhill, Rothmans and Lucky Strike, has a greater presence in faster-growing regions like Latin America, Africa, the Middle East and Asia.
It is much larger as a company than Reynolds, which is predominantly focused on the US, where its Newport, Camel and Pall Mall brands are among the top four in the country.
London-based BAT offered Friday to buy the 57.8 percent of Reynolds it doesn’t already own for the equivalent of $56.50 per share, 20 percent more than Thursday’s closing price. Investors would receive $24.13 in cash and 0.5502 of a BAT share for each Reynolds share they own.
The deal values Reynolds, based in Winston Salem, North Carolina, at $93 billion.
Shares in Reynolds jumped about 20 percent to $56.50 in premarket trading in New York, while BAT was up 4.1 percent to 50 pounds in London.
The merger “is the logical progression in our relationship and offers all shareholders a stake in a stronger, truly global tobacco and next generation products company,” BAT CEO Nicandro Durante said, referring to the firms’ expansion into electronic cigarettes.
Reynolds said in a statement that it will evaluate the offer.
Tobacco companies are particularly keen to expand in developing countries to make up for weaker sales in Europe and the US, where public awareness about the health hazards of smoking has grown.
“The markets in which these firms are the dominant players are declining, and they face ever increasing competition from Asia in seeking to develop new markets,” said Nigel Driffield, professor of international business at Warwick Business School in England.
Asian tobacco companies, he said, face less public pressure to not ramp up sales in developing markets, where public health regulation may not be as strict.
BAT said it had announced the offer before conducting any negotiations with Reynolds to comply with US law. The deal would have to be approved by the independent directors of Reynolds and shareholders of both companies.
BAT employs more than 50,000 people globally and has 200 brands in 200 markets. Reynolds employs 5,700, mostly in the US.
$47bn offer to create world’s biggest tobacco company
$47bn offer to create world’s biggest tobacco company
Closing Bell: Saudi benchmark index closes lower at 10,540
RIYADH: Saudi equities ended Wednesday’s session lower, with the Tadawul All Share Index falling 55.13 points, or 0.52 percent, to close at 10,540.72.
The sell-off was mirrored across other indices, with the MSCI Tadawul 30 Index retreating 5.79 points, or 0.41 percent, to close at 1,393.32, while the parallel market Nomu slipped 74.56 points, or 0.32 percent, to 23,193.21.
Market breadth remained firmly negative, as decliners outpaced advancers, with 207 stocks ending the session lower against just 51 gainers on the main market.
Trading activity moderated compared to recent sessions, with volumes reaching 123.5 million shares, while total traded value stood at SR2.72 billion ($725.2 million).
On the sectoral and stock level, Al Moammar Information Systems Co. led the gainers after surging 9.96 percent to close at SR172.30, extending its rally following a series of contract announcements tied to data center and IT infrastructure projects.
Al Masar Al Shamil Education Co. climbed 4.89 percent to SR27.48, while Naqi Water Co. advanced 3.36 percent to SR58.50. Al Yamamah Steel Industries Co. and Al-Jouf Agricultural Development Co. also posted solid gains, rising 3 percent and 2.86 percent, respectively.
Losses, however, were concentrated in industrial names. Saudi Kayan Petrochemical Co. fell 3.67 percent to SR4.73, while Makkah Construction and Development Co. slid 3.44 percent to SR80.
Saudi Tadawul Group Holding Co. retreated 3.28 percent to SR147.50, weighed down by broader market weakness, and Saudi Cable Co. declined 3.18 percent to SR143.
Alkhaleej Training and Education Co. rounded out the top losers, shedding just over 3 percent.
On the announcement front, BinDawood Holding announced the signing of a share purchase agreement to acquire 51 percent of Wonder Bakery LLC in the UAE for 96.9 million dirhams, marking a strategic expansion of its food manufacturing footprint beyond Saudi Arabia.
The acquisition, which remains subject to regulatory approvals, is expected to support the group’s regional growth ambitions and strengthen supply chain integration.
BinDawood shares closed at SR4.68, up 0.43 percent, reflecting a positive market reaction to the overseas expansion move.
Meanwhile, Al Moammar Information Systems disclosed the contract sign-off for the renewal of IT systems support licenses with the Saudi Central Bank, valued at SR114.4 million, inclusive of VAT.
The 36-month contract is expected to have a positive financial impact starting from fourth quarter of 2025, reinforcing MIS’s position as a key technology partner for critical government institutions. The stock surged to the session’s limit making it the top gainer.
In a separate disclosure, Maharah Human Resources confirmed the completion of the sale of its entire stake in Care Shield Holding Co. through its subsidiary, Growth Avenue Investments, for a total consideration of SR434.3 million.
The transaction involved the transfer of 41.36 percent of Care Shield’s share capital to Dallah Healthcare, with Maharah receiving the full cash proceeds.
Despite the strategic divestment, Maharah shares closed lower, ending the session at SR6.12, down 1.29 percent.
