Shares of Reynolds American Inc. soared 18% ahead of the bell on Friday after British American Tobacco PLC launched a bid to buy its U.S. peer. BAT, which already owns 42.2% of Reynolds, has offered $56.50 a share for the remaining Reynolds shares, valuing the deal at $47 billion. The price marks a 20% premium over Reynolds's $47.17 closing price on Thursday. "We always expected this deal to happen eventually, but we are surprised by the timing," analysts at Citigroup said in a note. "It is true that BAT is doing this deal while borrowing rates are low, but it could have bought RAI before RAI bought Lorillard, when the share price was 57% lower," they added. Reynolds bought Lorillard last year for $25 billion. Shares of British American Tobacco were up 3% in London and 3.1% in U.S. premarket trade.
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