Reynolds an Attractive Asset, but Valuation Leaves Us Uninspired From British American Perspective
After analysing the potential cash-flow impact from British American Tobacco’s offer to acquire Reynolds American, we are uninspired by the deal. The deal currently on the table is value-neutral for British American, and any sweetening of the deal may be value-destructive. We also don't think the deal would materially enhance British American's wide economic moat rating. On the other hand, we accept that this is the best option in British American's acquisition opportunity set, and given the lim...British American Tobacco is engaged in tobacco and nicotine products. This includes Co.'s Next Generation Products, comprising its vapour and tobacco heating products, and its oral tobacco and nicotine products such as moist snuff and snus. Co.'s U.S business (Reynolds American) brand portfolio which includes Newport, Camel and Pall Mall. These, and other brands including Doral, Misty and Capri, are manufactured in a variety of styles and marketed throughout the U.S. Co. has other international and local cigarette brands including Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, Benson & Hedges, John Player Gold Leaf, State Express 555 and Shuang Xi.
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