BAT submits proposed offer for Souza Cruz

British American Tobacco has submitted a proposed offer for Souza Cruz.

In a note posted on its website yesterday, BAT said that, through its Brazilian controlled company British American Tobacco Prestação de Serviços, it had filed with the Brazilian securities regulator, the Comissão de Valores Mobiliários (CVM), a request to register a public tender offer to acquire up to all of the 24.7 percent of Souza Cruz shares that are not currently owned by BAT and to delist the company.

‘The offer for Souza Cruz’s shares is at a price per share of R$26.75, to be paid in cash, in Brazilian Reais, and to be reduced by any dividend paid by Souza Cruz,’ the note said. ‘A price of R$26.75 per share would represent a premium of 30.0 percent to Souza Cruz’s volume weighted average closing share price over the three months to Friday 20 February 2015 (being the last trading day before BAT’s possible offer for Souza Cruz was announced).

‘In accordance with the relevant Brazilian rules, N M Rothschild & Sons (Brasil) Limitada (Rothschild) was appointed as independent evaluator and has carried out an independent valuation of Souza Cruz as part of the offer process which has been filed with the CVM. On a discounted cashflow basis the Rothschild report gives a range of R$22.09 to R$24.54 per Souza Cruz share.

‘The offer is still subject to prior approval by the CVM. Upon approval, a formal offer can be made by BAT which will remain subject to the satisfaction of certain conditions precedent, including acceptance of the offer by two-thirds of the holders of free float shares that qualify for the auction. The terms and conditions of the offer are described in further detail in the form of notice of the offer (Edital) which will be available to view on the CVM’s website.’