British American Tobacco takes control of Reynolds for $49bn

British American Tobacco has agreed a $49.4bn (£40bn) deal to take control of US rival Reynolds, creating the world's largest listed tobacco firm.

The UK company has been in talks with Reynolds for months about buying the 57.8% stake it does not already own.

The merger would bring together some of the tobacco industry's best-known brands, including Lucky Strike, Rothmans, Dunhill and Camel cigarettes.

A merger "creates a stronger, truly global tobacco" business, BAT said.

BAT, a shareholder in Reynolds since 2004, said last year that the merger was "the logical progression in our relationship".

However, the UK company's initial approaches were rebuffed by Reynolds, and a $47bn offer was rejected last November.

BAT estimates that it can make $400m worth of cost-savings through the merger.

Reynolds has been operating since 1875 and is the second largest tobacco company in the US after Altria, which owns Philip Morris USA.