British American Tobacco could puff up cash offer for Reynolds American

 
William Turvill
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World No Tobacco Day
British American Tobacco already owns a 42.2 per cent stake in Reynolds (Source: Getty)

British American Tobacco (BAT) is preparing to puff up its takeover bid for US rival Reynolds, according to reports.

The FTSE 100 cigarette company announced a $56.50-per-share bid for the 58 per cent of Reynolds American it does not already own in October. This bid valued Reynolds at around $47bn.

Taking full control of Reynolds would open a valuable door in the US market for BAT.

Read more: Shares in BAT have jumped after it made a $47bn offer for Reynolds

Some 43 per cent of the offer, or $24.13 per share, was in cash, with the remainder in BAT shares.

Negotiations have centred on altering the cash-share balance, the Sunday Times reported, and BAT has indicated it is willing to add more cash to the deal.

It was reported that this alteration could add a small amount to the overall price as well as reducing the stock offer.

BAT’s share price has tumbled six per cent to £45.09 since it announced the takeover approach, while Reynolds’ is up 20 per cent to $55.54.

Read more: British American Tobacco hopes for lucky strike with $47bn Reynolds offer

British American Tobacco British American Tobacco | mobile image

It was reported that BAT could offer an additional $8 per share to the offer and could be announced as soon as this week.

BAT declined to comment.

Reynolds American Reynolds American | mobile image

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