Cigarette giant British American Tobacco (BAT) has increased the price tag to buy out associate company Reynolds, but firmly believes that the $49bn deal will enhance the enlarged group’s ability to bolster margins and grow earnings. On Tuesday, BAT, which already owns a 42% stake in Reynolds, outlined revised terms of the takeover, pitching a sweeter cash and scrip settlement. The revised offer will see Reynolds shareholders receiving a cash settlement of $29.44 per share in cash as well as a scrip settlement in the form of BAT American depository receipts listed on the New York Stock Exchange. The settlement implies a value of $59.64 per Reynolds share, a marked increase on BAT’s opening bid of $56.50 per share. The offer price represents a 26% premium on Reynold’s closing share price on October 20 2016, and gives the company an enterprise value of close to $100bn. BAT is the second-largest company on the JSE with a market capitalisation of about R1.586-trillion. Both companies’ b...

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