British American Tobacco’s Proposed $93 Billion Merger with Reynolds

On October 21, 2016, British American Tobacco p.l.c. (“BAT”), which owns 42.2 percent of Reynolds American Inc., made a proposal to merge with Reynolds through the acquisition of the remaining 57.8 percent in the company for $47 billion, of which approximately $20 billion would be in cash and $27 billion in BAT shares.

The proposal values Reynolds at $56.50 per share, of which $24.13 would be in cash and $32.37 would be in BAT shares, representing a premium of 20 percent over the closing price of Reynolds common stock on October 20, 2016, and an enterprise value of $93 billion.

Cravath is representing British American Tobacco in connection with the transaction.

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; partner 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 on executive compensation and benefits matters; partner Christine A. Varney and senior attorney Jesse M. Weiss on antitrust matters; 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 also worked on M&A matters and Christopher C. Gonnella also worked on executive compensation and benefits matters.