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Herbert Smith Freehills and Cravath act as BAT lights up $47bn Reynolds takeover

Herbert Smith Freehills (HSF) and Cravath, Swaine & Moore are advising British American Tobacco (BAT) on its offer to acquire the remaining 57.8 % stake in Reynolds American for $47bn. BAT had already owned 42.2% of Reynolds for the last 12 years.

The FTSE 100 company is offering approximately $20bn in cash and $27bn in BAT shares.

BAT said this represents a premium of 20% over the closing price of Reynolds stock on 20 October. This would create the world’s largest listed tobacco company by net turnover and operating profit.

BAT has not yet negotiated with Reynolds on the bid, and as such Reynolds has not declared a legal adviser.

The BAT team was led by director Bob Casey and head of legal M&A Craig Harris. The team at HSF was led by senior partner James Palmer and senior corporate M&A partner Alex Kay in London, along with Gillian Fairfield and Isaac ‎Zailer.

Cravath’s team advised on US aspects and was led by partnes Philip Gelston, David Perkins, Ting Chen and Alyssa Caples.

Kay said: ‘We are delighted to be working with BAT on this major proposed transaction which would consolidate BAT’s position as leading tobacco company.’

HSF is a long-standing adviser to the British tobacco giant and was instructed by BAT on the UK government’s plans to bring in plain cigarette packaging in March last year and the acquisition of Europe’s largest eCigarette CHIC Group in a bid to enter the e-cigarette market in September 2015.

The proposed merger is subject to Reynolds’s endorsement, and approval by BAT and Reynolds shareholders.