British American Tobacco has offered to buy US tobacco company Reynolds American in a $47 billion deal.
The deal would bring together Newport, Kent and Pall Mall cigarettes to create the world's biggest listed tobacco company.
The takeover would give BAT a leading position in the high-value US market and more premium brands such as Camel which it can sell in countries including Russia and Turkey where demand for Western cigarettes is still growing.
The British group already has a 42% stake in Reynolds.
It said its offer valued the company's shares at $56.50, of which $24.13 would be in cash and $32.37 would be in BAT shares, representing a premium of 20% over the closing price of Reynolds stock last night.
The total price for the remaining 57.8% of Reynolds would be $47 billion, of which approximately $20 billion would be in cash and $27 billion in BAT shares, BAT said.
BAT chief executive Nicandro Durante said the deal would create a US market leader and the world's largest listed tobacco company by net turnover and operating profit.
The cost synergies associated with the proposed merger are estimated by BAT to be relatively modest at around $400m.
Reynolds bought Newport-maker Lorillard in 2015, making it a stronger competitor to Marlboro-maker Altria Group. Together, Reynolds and Altria dominate the US market.
Reynolds has yet to respond to the unsolicited offer.
Because BAT already has such a big holding in the US group, rules set by the US Securities and Exchange Commission require disclosure of such an approach as soon as it has been made.
Since Britain's shock vote to leave the European Union in June, shares in BAT soared to all-time highs as investors bet the falling pound would boost the profits of companies that make most of their revenue outside the United Kingdom.
If successful, the takeover would be one of the biggest this year globally.
The tie-up is also one of the only mega deals left in a global tobacco industry which is already dominated by six companies, and it would create the only player with a major presence in both US and international markets.
Smoking rates in the US and other western markets are declining, due to increasing health consciousness and greater regulation and taxes. All big tobacco firms are investing in e-cigarettes and other vapor-based products, to diversify.
BAT has in recent years focused on international markets such as Ukraine, Bangladesh, Russia, Vietnam and Turkey where smokers are increasingly choosing premium cigarettes like its Dunhill, Lucky Strike, Pall Mall and Rothmans brands.
Its brands are sold in more than 200 markets, with market-leading positions in at least 55.
BAT also said today it had performed well in the first nine months of the year, raising both revenue at constant rates of exchange and cigarette volumes.
Year-to-date revenue grew 8.1% at constant rates of exchange, it said, as its biggest brands sold 9.8% more cigarettes.