British American Tobacco (BAT) has offered to take full control of tobacco company Reynolds American in a trans-Atlantic acquisition worth $47bn. If agreed, it would be the largest foreign deal by a British company in recent years. 

The purchase would pivot BAT towards the high-value American market, and amalgamate brands such as Camel and Lucky Strike to form the world’s largest publicly traded tobacco company, valued at £157bn ($192bn). However, state-owned China National Tobacco Corp would remain the largest overall. 

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The post-Brexit significance of BAT’s proposal is under debate. BBC Business claims that it “flies in the face of the prevailing post-Brexit wisdom that a weak pound would stop British companies buying foreign rivals”. 

Contrastingly, others question the ‘Britishness’ of BAT. With 40% of the stock, Americans own twice as many shares as Brits. Moreover, while based in London, BAT’s business is mostly foreign. This goes some way to explaining why its shares benefited from Brexit as investors placed money into companies with strong overseas earnings. 

According to Bloomberg, BAT’s shares have risen 13% since the June 23 referendum on the UK's membership of the EU and account for 57% of the proposed offer, thereby “offsetting the increased expense of the cash portion, which was weakened by the drop in the value of sterling”. Brexit has increased the worth of BAT’s international sales when converted back into sterling.

BAT’s offer highlights Brexit’s advantages for British multinational enterprises and companies with a predominantly foreign market. Among these, outward FDI may increase in the coming months. The opposite applies to domestically oriented companies more vulnerable to sterling’s decline. For them, crossborder penetration and outward FDI is costlier than ever.