BAT Revenues Up On Volume; Offers $47 Bln For Remaining Stake In Reynolds

(RTTNews) - British American Tobacco plc (BATS.L, BTI) reported Friday that its nine-month revenue grew 10.2 percent, further enhanced by the relative weakness in Sterling against the company's key trading currencies.

Revenue at constant rates of exchange increased 8.1 percent, while the increase was 6.2 percent on an organic basis.

Cigarette volume from subsidiaries was 497 billion, 2.2 percent higher than last year. Total tobacco volume was up 2 percent to 515 billion.

Higher Cigarette volume in a number of markets, notably in Ukraine, Bangladesh, Russia, Vietnam and Turkey, was partly offset by industry declines in Pakistan, Brazil and Venezuela. Volume in the three months to September was flat, but fell 1.3 percent on an organic basis.

Market share was up 40 bps year-to-date, driven by the Global Drive Brands, which grew market share by 90 bps.

Looking ahead, the company said it is on track to deliver another year of good earnings growth at constant rates of exchange.

Separately, BAT, which owns 42.2 percent of Reynolds American Inc. (RAI), has made a proposal to acquire the remaining 57.8 percent stake. The proposed merger values Reynolds at $56.50 per share.

The total consideration for the remaining 57.8% of Reynolds would be $47 billion, of which approximately $20 billion would be in cash and $27 billion in BAT shares.

The company noted that the U.S. securities law required BAT to announce its merger proposal promptly after it was made to the Board of Reynolds. As a result, BAT has been unable to have prior negotiations with Reynolds regarding the proposal.

The proposed price represents a 20 percent premium to the closing share price on October 20. Settlement is proposed to be by a mix of both $24.13 in cash and 0.5502 shares of BAT for each Reynolds share.

The proposal is earnings accretive in the first full year, including modest cost synergies and is expected to result in an accretive dividend per share for shareholders.

According to BAT, the combined company would be the world's largest tobacco and Next Generation Products business by net turnover and operating profit.