British American Tobacco PLC (BAT) is involved in a transaction driven by Reynolds American Inc.'s (RAI's) acquisition of Lorillard Inc. It includes additional equity issuance and asset divestments. BAT is acquiring $4.7 billion of equity issued by RAI using debt-financing and cash. We believe that BAT's debt protection metrics are likely to remain at a level commensurate with our assessment of its "intermediate" financial risk profile. We are affirming our long- and short-term corporate credit ratings on British American Tobacco at 'A-/A-2'. The stable outlook reflects our view that the company will continue to generate strong discretionary cash flows, which will help protect its debt metrics. On July 17, 2014, Standard&Poor's Ratings Services affirmed its long- and short-term
