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BAT bucks market fall amid talk of interest in Reynolds America

Discussion in 'Market News' started by Lily, Mar 7, 2016.

  1. Lily

    Lily Forum Member

    Aug 29, 2015
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    Company could afford to bide its time on any deals, says Jefferies analysts

    British American Tobacco is bucking the downward market trend following weekend reports the company could be on the acquisition trail.

    Its shares are up 39p at 4083.5p in a FTSE 100 which is now down 50.41 points at 6149.02. The Sunday Telegraph reported that BAT has added Centerview Partners to its advisory team which led to speculation it could be contemplating a bid for the 58% of US group Reynolds America which it does not already own.

    We reflect on media speculation around a move by BATS for Reynolds. We keep any excitement firmly in check. We think BATS holds most of cards in any consolidation end-game and can afford to bide its time, pending a more favourable fx climate. But it all goes to show that BATS is a fabulously strategic asset, still trading on a compelling valuation despite a robust opening to 2016.

    Centerview is advisor of the moment, having advised on the recent ABI/SAB, Kraft/Heinz and Reynolds/Lorillard transactions. So it’s perhaps no surprise that BAT might value its expertise. But we are inclined to keep our excitement in check on the imminence of any deal by BAT, for either Reynolds or indeed Imperial Brands.

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