5 Overvalued Stocks Driven by Sterling Weakness

As British American Tobacco confirms it will buy rival Reynolds American, we look at BATs and four other overvalued stocks boosted by the weak pound

Karen Kwok 17 January, 2017 | 3:39PM

British American Tobacco (BATS) today announced a $49.4 billion agreement to buy 57.8% of rival company Reynolds American (RAI). The merger will make BATS the world's largest listed tobacco company by net revenue and operating profit. Share prices of British Tobacco dropped 2.8% today after the announcement.

British American first announced plans to buy the remaining stake in Reynolds in October. The company is currently the world's second largest quoted tobacco group by market share, while Reynolds is the second largest tobacco company in the US.

Nicandro Durante, chief executive of British American said in a statement the combination with Reynolds “will create a stronger, global tobacco” business. Morningstar senior equity analyst Philip Gorham said despite the offer being slightly rich, it is a good deal for British American strategically.  

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Anglo American PLC2,125.00 GBX0.12
Associated British Foods PLC2,583.00 GBX-1.94
British American Tobacco PLC3,352.50 GBX0.27
Morrison (Wm) Supermarkets PLC185.95 GBX-0.13
Victrex PLC2,280.00 GBX-0.70

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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