British American Tobacco’s $97 Billion Merger with Reynolds

On January 17, 2017, British American Tobacco p.l.c. (“BAT”), which owns 42.2 percent of Reynolds American Inc. (“Reynolds”), and Reynolds announced that they have agreed on the terms of a recommended offer for BAT to acquire the remaining 57.8 percent of Reynolds that it does not already own. Based on BAT’s share price and the Dollar‑Sterling exchange rate as of market close on January 16, 2017, this implies a total current value of $59.64 per Reynolds share and approximately $49.4 billion for the 57.8 percent of Reynolds not already owned by BAT, and a current enterprise value of $97 billion.

Cravath is representing BAT in connection with the transaction.

This development follows the announcement that BAT made a proposal to merge with Reynolds through the acquisition of the remaining 57.8 percent in the company for $47 billion on October 21, 2016. Please click here to read the Firm’s previous news item related to this proposal.

The Cravath team is led by partners Philip A. Gelston and Ting S. Chen and includes associates Daniel R. Satin, Chere C. See and Claudia J. Ricciardi on M&A matters; partners John W. White and Alyssa K. Caples and associate Lillian C. Bond on corporate and securities matters; partner Andrew W. Needham, Of Counsel Michael L. Schler and associate Peter W. Rogers on tax matters; partner Stephen M. Kessing and associate Matthew G. Jones on financing matters; partner Eric W. Hilfers and associate Matthew J. Bobby on executive compensation and benefits matters; partner Christine A. Varney and senior attorney Jesse M. Weiss on antitrust matters; partner John D. Buretta and associate Morgan J. Cohen on regulatory matters; partner David J. Kappos and associate Jason M. Sandler on intellectual property matters; and senior attorney Annmarie M. Terraciano on environmental matters. Ethan Kim and K. Rose Filler also worked on M&A matters and Christopher C. Gonnella also worked on executive compensation and benefits matters.