WINSTON-SALEM, N.C., Oct. 27 (UPI) -- The R.J. Reynolds Tobacco Co. has reportedly agreed to acquire the U.S. operations of British American Tobacco in a cash and stock deal worth $3.6 billion.
The merger will create a new holding company, Reynolds American, which will combine R.J. Reynolds and BAT's Brown & Williamson Tobacco Co.
The BBC said BAT will have a 42 percent minority interest in Reynolds American. The newly created entity will have a combined turnover of $10 billion, compared with $19 billion of market leader Philip Morris, which has a near-50 percent share of the U.S. market.
BAT said it expects cost savings of $500 million from the deal, while R.J. Reynolds expects savings of $800 million.
BAT denied the deal would amount to any kind of retreat from the U.S. market, despite its lack of control over the merged firms.
The British firm is barred from increasing its stake in the venture for the next 10 years, but Chairman Martin Broughton said BAT had "absolutely no intention" of selling out to R.J. Reynolds.
