BAT offers to buy out Souza Cruz stake

London - British American Tobacco has submitted a proposal to buy the 24.7% stake it does not own in Brazil's largest cigarette company, Souza Cruz, in a deal that would cost about £2.3bn.

The world's second-largest cigarette maker, which had said in February it was considering the idea, said the offer would be at a price per share of 26.75 reais in cash. It would then seek to delist the firm.

The buyout, which represents a 30% premium to the firm's volume-weighted average closing price over the last three months, would give the producer of Dunhill cigarettes full control over Souza Cruz, which has about 80% of Brazil's market.

The company, which was founded in 1903 by Portuguese immigrant Albino Souza Cruz, has six of Brazil's top 10 brands, including Derby, Hollywood, Free and Dunhill. The founder transferred control of the Rio de Janeiro-based firm to BAT in 1914.

BAT said it had filed a request to register a public tender to Brazil's securities regulator. Upon approval, a formal offer can be made.