Reynolds buyout possible by British American Tobacco

9th Jul 2014 10:01

British American Tobacco (BAT), famous for its Pall Mall and Lucky Strike cigarettes, could be close to a multi-billion dollar deal to buy out US peer Reynolds American, according to reports.BAT already owns 42% of Reynolds, one of the 'Big Three' tobacco giants in the States whose brands include Camel and Kool.A standtill agreement between BAT and Reynolds expires at the end of July, leaving the UK group free to bid for the rest of the shares.It is thought that full ownership would give BAT's access to Reynolds' compelling electronic cigarette platform and heat-not-burn technology.New York-listed Reynolds, with a market capitalisation of nearly $33bn, ended Tuesday's session at $61.31, though reports suggest that BAT could pay over $75 a share to win over the US group.However, any potential deal would effectively ruin the much-anticipated merger between Reynolds and Big Three rival Lorillard, which is well known for its expertise in e-cigarettes.BAT shares were down 0.3% at 3,546.07p by 09:26 on Wednesday.BC