...Lorillard Acquisition: The ratings were affirmed in July 2014 following British American Tobacco plc.s (BAT) announcement that it will contribute USD4.7bn capital to funding the acquisition by its associate Reynolds American Inc (RAI) of rival US player Lorillard, Inc. (BBB/RWN) through a cash and equity offer. BAT will in turn raise this from internal resources and borrowings. Stronger US Associate: The transaction, which is subject to US Antitrust approval, will transform the US tobacco market by consolidating the number-two and number-three players into a more robust competitor to the strong leader Altria Group, Inc (BBB+/Stable). The new RAI will, after adjusting for the asset disposal envisaged, enjoy a stronger market share of above 30%, and a highly focused and easier to manage brand portfolio. It will also enjoy substantial cost synergies resulting from the back-to-back divestment of Lorillard's manufacturing, sales force and head office. BAT will indirectly benefit from RAI's enhanced...
