London: British American Tobacco (BAT) has agreed a $49.4 billion takeover of its American rival Reynolds, the company announced on Tuesday.
The British tobacco company spent months negotiating the purchase of the remaining 57.8 per cent of Reynolds that it did not already own, Efe news reported.
The deal was settled when BAT increased their initial offer by some $2 billion.
"We are very pleased to have reached an agreement with the Transaction Committee and Board of Reynolds and we look forward to putting the recommended offer to shareholders," said BAT Chief Executive Nicandro Durante on Tuesday.
BAT, whose brands include Dunhill and Lucky Strike, said the merger would lead to a "stronger, truly global tobacco and Next Generation Products (NGP) company to deliver sustained long-term profit growth and returns."
With the takeover, the British company hoped to cut production costs by $400 million annually.
Established in 1902, BAT on Tuesday became the largest listed tobacco firm in the world.
Reynolds has been active since 1875 and was the second largest tobacco company in the US after Altria, owner of Philip Morris.