British American Tobacco (BAT) is to take control of US rival Reynolds in a $49.4bn (£40.69bn) deal that creates the planet's largest listed tobacco firm and unites some of the industry's best-known brands, the BBC reports.
The agreement comprises $25bn (£20.59bn) of BAT shares and $24.4bn (£20.1bn) in cash, valuing Reynolds at more than $85bn (£70bn).
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The merger will also strengthen BAT's foothold in the US and give the combined business a significant presence in high-growth markets including South America and the Middle East.
Chief executive Nicandro Durante said: "We believe this [deal] will drive continued, sustainable profit growth and returns for shareholders long into the future."
BAT, the maker of more than 200 brands and a big player in the e-cigarettes market, estimates it can make $400m (£329.5m) of cost-savings through the deal, which now sees the likes of Lucky Strike, Rothmans and Camel under one roof.
Negotiations lasted several months. BAT said last year that a merger with Reynolds would be "the logical progression in our relationship", but its initial approaches were rebuffed, with a $47bn offer rejected last November.
City AM reports that BAT's shares rose 1.2 per cent at the open.