British American Tobacco (BTI) is acquiring Reynolds American (RAI) for $59.64 in cash and stock. BTI already owns 42% of the company, and will be purchasing the remaining shares with the transaction set to close in the third qtr of 2017.
This deal was announced in January, and cleared the anti-trust waiting period in March.
In a case such as this where one good company acquires another, I normally like to keep my position and own the acquirer’s stock. But I’m not a big fan of BTI. The company doesn’t grow profits systematically each year, has a low estimated long-term growth rate, and I have little news or financials on the stock since its based in London. Thus I will sell my shares of RAI in the Conservative Growth Portfolio. I do like Altria (MO) but feel the stock is high right now, so I will look to add it if or when the stock corrects.
