US cigarette maker Reynolds American has rejected a buyout offer worth $47bn (£38bn) from British American Tobacco, according to reports.
British American already owns 42% of Reynolds, the company behind brands including Camel and Newport.
Last month it proposed buying the rest of the business to create the world’s biggest tobacco firm.
But both Reuters and Bloomberg report the deal has been rejected. Reynolds declined to comment on the reports.
British American, which makes brands including Rothmans, has been a shareholder in Reynolds since 2004. The FTSE 100 company is offering $20bn in cash and $27bn in shares for the US business.
At the time of the bid BAT said the merger was “the logical progression in our relationship” and estimated it could produce cost savings worth $400m.
If the buyout went ahead, it would be the biggest foreign deal by a British company in recent years, and go against the idea that a weak pound would stop British companies buying foreign rivals.
RJ Reynolds has been operating since 1875 and is the second-largest tobacco company in the US after Altria, which owns Philip Morris USA.
Last year, Reynolds completed its $25bn takeover of US rival Lorillard. The combined company was forced to sell a number of brands, including Kool, Salem and Winston, to satisfy regulators. They were eventually bought by Imperial Tobacco – now Imperial Brands – for $7.1bn.