HSF and Cravath advise as British American Tobacco eyes $47bn merger with Camel owner

sefs-cigar-waters1014-Article-201610210434 British American Tobacco (BAT) has instructed Cravath Swaine & Moore and Herbert Smith Freehills (HSF) to advise on its $47bn (£38.4bn) merger proposal.

The London-listed tobacco giant has outlined plans for a merger with Reynolds American, the owner of Camel cigarettes, by purchasing the remaining 57% of the US company it does not already own.

The HSF team is being led out of London by the firm’s chair and senior partner James Palmer, financial institutions head Alex Kay, tax head Isaac ‎Zailer and corporate partner Gillian Fairfield. BAT is also receiving legal counsel from its in-house team, led by head of M&A Craig Harris and attorney Bob Casey.

The Cravath team is led by US corporate partners Philip Gelston, David Perkins, Ting Chen and Alyssa Caples.

Davis Polk is providing UK and US legal advice to the financial sponsors and joint sponsors to BAT, with a team led by City corporate partner Will Pearce and New York corporate partner Philip Mills.

It is understood that Reynolds American has not yet appointed legal counsel.

HSF previously advised longstanding client BAT on its purchase of Polish e-cigarette company CHIC Group in September last year. BAT also turned to HSF to represent it on a high profile dispute regarding UK plain packaging legislation.

The cash and share offer values Reynolds at $56.5 (£46.1) a share, $24.13 (£24.1) of which would be paid cash, with the remaining $32.37 (£26.4) paid in BAT shares.

The offer is subject to approval by Reynolds’ board of directors and both companies’ shareholders.

BAT has turned to Deutsche Bank, UBS and Centerview Partners as financial advisers on the deal.

HSF is currently advising on O2 parent company Telefonica’s plans for an initial public offering of the UK telecoms company.

Equity capital markets head Charles Howarth is understood to be leading the firm’s team.

It is acting alongside Ashurst, which is advising the underwriting banks on the proposed float, with a team led by equity capital markets head Nicholas Holmes.