British American Tobacco will take over Reynolds American Inc. to create the world's largest publicly traded tobacco company that would seek to capitalize on growing demand for electronic cigarettes in the U.S. and traditional ones in developing countries.

BAT, which has a greater global footprint and already sells Dunhill, Rothmans and Lucky Strike cigarettes, is interested in Reynolds' greater market share in the U.S., where use of e-cigarettes is growing fastest.

On the other hand, they would be able to market Reynolds' brands like Newport, Camel and Pall Mall across a range of developing economies, where anti-smoking campaigns are not as strong as in the U.S. and Europe.

British American Tobacco will take over Reynolds American Inc. to create the world's largest publicly traded tobacco company. BAT already sells Lucky Strike cigarettes

Other British American brands include Dunhill (left) and Rothmans (right)

BAT will pay about $49billion to buy the 57.8 per cent of Reynolds' it doesn't already own. Reynolds shareholders will receive for each share $29.44 in cash and 0.5260 BAT shares.

That values Reynolds, which is based in Winston Salem, North Carolina, at $59.64 per share, or $85billion in total.

'Our combination with Reynolds will benefit from utilizing the best talent from both organizations,' BAT's chief executive, Nicandro Durante, said in a statement Tuesday.

'It will create a stronger, global tobacco and (next generation products) business with direct access for our products across the most attractive markets in the world.'

Tobacco companies are particularly keen to expand sales of traditional cigarettes in developing countries to make up for weaker sales in Europe and the U.S.

Camel cigarette packs are pictured in this July 2014 file photograph

The industry has been grappling with widespread anti-smoking campaigns that have forced companies like BAT and Reynolds to diversify into nicotine replacements and e-cigarettes to meet consumer health concerns.

BAT is the larger company of the two.

BAT's Rothman cigarettes are pictured here. BAT will pay about $49billion to buy the 57.8 per cent of Reynolds' it doesn't already own

Founded in 1902, it sold 663billion cigarettes in more than 200 countries in 2015, generating revenue of 13.1billion pounds ($16billion).

Reynolds shipped 76 billion cigarettes and reported sales of $10.7billion.

BAT employs more than 50,000 people against Reynolds' 5,700 employees, who are mostly in the U.S.

Reynolds traces its roots to 1875, when Richard Joshua Reynolds started a chewing tobacco company in what was then Winston, North Carolina.

The company's links with British American Tobacco date to 2004, when R.J. Reynolds Tobacco Co. merged with BAT's Brown & Williamson unit, creating Reynolds American.

BAT was left with a 42 per cent stake in the new company.

The planned merger would create a company likely to overtake Philip Morris International Inc. as the world's biggest publicly traded tobacco company.

British American Tobacco (BAT) brands Dunhill Kent Lucky Strike Pall Mall (international) Rothmans Viceroy Advertisement

R.J. Reynolds brands Camel Camel Snus Capri Doral Misty Newport Pall Mall (US) Advertisement

But China's National Tobacco Corp. is bigger than BAT and Reynolds both combined, Euromonitor International data showed.

Asian tobacco companies face less public pressure over increasing sales in developing markets, where public health regulation may not be as strict, analysts say.

'This is a big move, that makes a lot of sense for BAT,'said Steve Clayton, a fund manager for financial services firm Hargreaves Lansdown.