UPDATE 2-British American Tobacco mulls $3.5 bln buyout of Brazil unit stake

lunes 23 de febrero de 2015 14:08 GYT

(Adds comments from source, background throughout)

By Martinne Geller and Guillermo Parra-Bernal

LONDON/SAO PAULO Feb 23 (Reuters) - British American Tobacco Plc is considering a buyout of the 24.7 percent stake it does not already own in Souza Cruz SA, Brazil's largest cigarette company, in a deal that could cost about 2.3 billion pounds ($3.53 billion).

In a statement on Monday, London-based BAT said it was looking to pay 26.75 reais in cash for each share of Souza Cruz. That is 13 percent above Souza Cruz's closing price on Friday and represents a 30 percent premium to its volume-weighted average closing price over the last three months.

BAT is negotiating a credit line with a major British-based lender to help pay for the deal, a source with direct knowledge of the plans told Reuters on condition of anonymity. The offer is subject to approval by BAT's board and an independent appraisal report, as required by Brazilian securities law.

The buyout would give the producer of Dunhill cigarettes full control over Souza Cruz, which has about 80 percent of Brazil's market. BAT last considered a Souza Cruz buyout almost five years ago, but the plan foundered due to a strong Brazilian currency, the source added.

The Brazilian real has shed 35 percent against the dollar since February 2010.

Shares of Souza Cruz had their biggest intraday gain in almost four years, jumping 9.5 percent on Monday on Sao Paulo's stock exchange. The stock is up 22 percent in the past 12 months. BAT shares were up almost 2 percent at 37.27 pounds in London.

Souza Cruz has more than 5,000 minority investors in Brazil, including a large chunk of retail investors who have kept the stock in their families for two or three generations, the source added.   Continuación...