British American Tobacco (bti) has offered to buy U.S. tobacco company Reynolds American (rai) in a $47 billion deal that would bring together Newport, Kent, and Pall Mall cigarettes in the world's biggest listed tobacco company.
The British group, which has a 42% stake in Reynolds, said its offer valued the company's shares at $56.50, of which $24.13 would be in cash and $32.37 would be in BAT shares, representing a premium of 20% over the closing price of Reynolds stock on Thursday.
Get Term Sheet, Fortune’s daily email about deals and deal-makers.
The total consideration for the remaining 57.8% of Reynolds would be $47 billion, of which approximately $20 billion would be in cash and $27 billion in BAT shares, it said on Friday.
BAT Chief Executive Nicandro Durante said the deal would create the U.S. market leader and the world's largest listed tobacco company by net turnover and operating profit.
For more big tobacco mergers, watch Fortune's video:
"We are proud of the Group's track record of consistent delivery for shareholders and bringing these two great companies together would further strengthen that delivery in the future," he said.
BAT also said on Friday it had performed well in the first nine months of the year, growing both revenue at constant rates of exchange and cigarette volumes, driven by its focus on key brands Dunhill, Lucky Strike, Pall Mall, and Rothmans.
Year-to-date revenue grew 8.1% at constant rates of exchange, as its biggest brands sold 9.8% more cigarettes.