British American Tobacco completes acquisition of Reynolds to create world’s biggest tobacco firm
British American Tobacco (BAT) has come under fire from health campaigners after shareholders approved its buyout of American firm Reynolds on Wednesday, which will create the world’s biggest tobacco company.
Shareholders of both companies approved the deal, which will take BAT back into the US market after a 12-year absence. It ends American ownership of Reynolds American Incorporated (RAI), a tobacco company headquartered in the US south since 1875.
The move is also expected to speed up the development of e-cigarettes and vapes.
The deal was backed by nearly all shareholders who voted at a special meeting at the Hilton London Bankside in London. At Reynolds headquarters in Winston-Salem, North Carolina, meanwhile, the vast majority of Reynolds shares approved the deal.
BAT is buying the 57.8 per cent of Reynolds it does not already own. The cash-and-stock offer announced in January valued each Reynolds share at US$59.64, up from US$56.50 offered in October. The deal is expected to complete by next Tuesday.
BAT is one of the multinational tobacco companies that have threatened governments in at least eight countries in Africa to block or dilute new regulations to limit the harm caused by smoking. BAT says it is not against all regulation but sometimes needed to intervene.
The merger vote comes the same day that the World Health Organization (WHO) released a report on tobacco companies push against anti-smoking laws worldwide . WHO’s director-general, Dr Tedros Adhanom Ghebreyesus, said “governments around the world must waste no time” in enacting the laws.
Farm worker activists in the US said they were anxious around the growing power of tobacco firms in response to the merger.
In London, Nicandro Durante, the BAT chief executive, welcomed the “overwhelming support” for the acquisition from both sets of shareholders. He added: “We look forward to welcoming Reynolds group employees to British American Tobacco and to realising the benefits of operating these two great companies as one stronger, global tobacco and Next Generation Products business with direct access for our products across the most attractive markets in the world.”
The deal brings together BAT’s Lucky Strike, Dunhill, Rothmans and Benson & Hedges cigarettes with Reynolds’ Pall Mall, Newport and Camel.
But Deborah Arnott, chief executive of UK public health charity Action on Smoking and Health (ASH), was worried what the creation of an even bigger business would mean for the growing tobacco epidemic in poorer countries. “By taking over Reynolds, BAT, already one of the top five companies in the FTSE 100, is now the largest tobacco company in the world.
“Despite all the talk during the merger negotiations of the importance of ‘next generation products’ BAT is still clearly focused on flogging fags to low- and middle-income countries. As a result, it is hardly surprising that the tobacco epidemic is still growing in such countries rather than on the wane as it is in the UK and the US.
“We find it particularly shameful that a British company, BAT, is so dominant in Commonwealth countries like those in Africa, where it has been exposed for its continued use of intimidatory tactics. Ironically this is at the same time that the British government has committed £15 million in aid funding to help governments tackle the epidemic and drive down smoking rates.”
Arnott said companies were only serious about promoting e-cigarettes and vapes as alternatives to smoking in high-income, western countries.