Might the tobacco industry's big looming deal be in trouble? Business news website StreetInsider.com, citing "a person claiming to have knowledge of the matter," says that British American Tobacco's (NYSEMKT: BTI) proposed acquisition of peer Reynolds American (NYSE: RAI) has "hit a snag." The reason or reasons for the hiccup were not specified.
Neither British American Tobacco nor Reynolds American have commented on the report.
Last October, British American Tobacco offered $47 billion in cash and stock to buy the part of Reynolds American that it does not already own. (At the time, it held just over 42% of the company.) The latter company said it formed a special committee of directors to evaluate the proposal.
The offer was worth $56.50 per Reynolds American share, a premium of around 20% to the stock's price when the bid was made public. The shares most recently closed at $55.44, indicating a bit of skepticism remains that the deal will be consummated at the offer price.
Reynolds American is no stranger to the acquisition game. It took over Lorillard -- maker of the Newport and Kent brands, among others -- in a $25 billion deal that was completed shortly before British American Tobacco made its pitch.
British American Tobacco -- owner of well-established brands such as Lucky Strike and Dunhill -- has said that fully owning Reynolds American "would create a stronger, truly global tobacco and Next Generation Products company."
The combined entity would be the top cigarette producer in the world in terms of revenue and market capitalization.
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Eric Volkman has no position in any stocks mentioned.