Acquisition

BRITISH AMERICAN TOBACCO PLC
20 July 1999

BRITISH AMERICAN TOBACCO - MALAYSIA ANNOUNCEMENT

The following announcement was made in Malaysia today, 20th July 1999, by
British American Tobacco's subsidiaries Rothmans of Pall Mall (Malaysia) Bhd
and Malaysian Tobacco Company Bhd.


MERGER OF ROTHMANS OF PALL MALL MALAYSIA AND MALAYSIAN TOBACCO COMPANY
OPERATIONS
Rothmans to acquire the businesses of MTC for RM 769.5 million

Kuala Lumpur, July 20, 1999 - Rothmans of Pall Mall (Malaysia) Berhad
(Rothmans Malaysia) and Malaysian Tobacco Company Bhd (MTC) have reached
agreement on the terms of a proposed merger of their operations. Their
agreement follows the completion of the merger of their parent companies
last month.

Under the proposal, MTC will sell and Rothmans Malaysia will acquire all
of MTC's operating businesses for a total cash consideration of RM 769.5
million. The purchase consideration represents the equivalent of RM 3.80
per MTC share in issue.

The proposals are conditional on approvals from minority shareholders of
Rothmans Malaysia and MTC and all regulatory authorities, which are
expected in the final quarter of the year.

The proposed transaction is expected to generate benefits from a
consolidation of the businesses of MTC and Rothmans Malaysia, which now
have a common controlling shareholder, British American Tobacco plc
through its group companies.  It will also enable cost savings through
economies of scale and rationalisation of overlapping operational
structures in manufacturing, marketing, sales, distribution and
administration.  The enlarged company will enhance its position as the
leading player in the Malaysian cigarette market with an expanded brand
portfolio.

Rothmans Malaysia will incur one-off costs of approximately RM 135
million for the proposed transaction.  These costs are expected to
impact its overall earnings for the period from completion to Dec 31,
2000.  However, it expects to achieve enhanced earnings in the second
full year following the acquisition.

Proposed transaction details

Under the proposed transaction, MTC will transfer its tobacco
manufacturing business to its wholly owned subsidiary, John Player
Special Sdn Bhd (JPS).

Rothmans Malaysia's wholly owned subsidiary, Tobacco Importers and
Manufacturers Sdn Bhd, will purchase the existing two RM1 shares in JPS
in issue and subscribe for 160,999,998 new ordinary shares of RM 1 each
for a total cash consideration of RM 161 million.

Rothmans Malaysia through its wholly owned subsidiary, Commercial
Importers and Distributors Sdn Bhd, will also acquire MTC Marketing Sdn
Bhd (MTCM) for RM 608.5 million.

Both Rothmans Malaysia and MTC have entered into an Asset Sale and
Investment Agreement for the purchase of JPS, and a Sale and Purchase
Agreement for the acquisition of MTCM.  Rothmans Malaysia and British
American Tobacco group companies will sign trademark licences to enable
the continued manufacture and marketing of British American Tobacco
cigarette brands currently made and sold by MTC (Benson & Hedges, Kent,
State Express 555, John Player Gold Leaf, John Player Special, Lucky
Strike, Pall Mall and Matterhorn).

Of the total cash consideration in the proposed transaction, RM 709.5
million will be paid on completion, with the remainder retained for any
adjustment and payable within 30 days from completion.

Rothmans Malaysia will finance the acquisition through borrowings and
internally generated funds.

The MTC Board of Directors is currently looking into various options for
MTC, which will be a cash-rich shell company following completion.  The
options include an injection of assets into the shell company to
maintain its listing status, or voluntary liquidation of the company,
whereby the remaining capital is returned to shareholders.

Commenting on the proposed transaction, Mr Nigel Buck, Managing Director
of Rothmans Malaysia said: ' The proposals will create an enlarged
company with around 70 percent share of the Malaysian tobacco market.
This will place the company in a strong position to benefit from
synergies and therefore provide value to shareholders, and deliver high
quality international brands to consumers.'

He said the total purchase consideration of RM 769.5 million (which
equates to RM 3.80 per MTC share) was arrived at on a willing buyer-
willing seller basis, after taking into consideration, inter alia, the
sharing between MTC and Rothmans Malaysia, of the incremental benefits
attributable to the operating businesses of MTC as part of Rothmans
Malaysia's tobacco business, and after entering into new trademark
licence agreements and a Dedicated Capacity and Contract Manufacturing
Agreement.

 'We believe that our offer to MTC is fair and will enable shareholders
to realise the value of their holdings.  The acquisition will enable us
to streamline distribution networks, and realise greater economies of
scale in production, as well as eliminate overlaps in operational
structure.'

MTC Chief Executive Officer, Mr Russell Cameron said the offer price was
good, given that on the basis of an independent valuation prepared for
the Board of MTC Directors, the underlying value of MTC's business would
be in the range of RM 470 million to RM 493 million, the equivalent of
between RM 2.32 and RM 2.43 per share.

He said: ' The offer thus represents a premium of between 56 and 64
percent of the underlying value of MTC's business. I believe it
attributes to MTC a fair share of the potential synergies from which
Rothmans Malaysia can expect to benefit. '

He pointed out that before the announcement of the global merger between
British American Tobacco and Rothmans International on 11 January, 1999,
MTC shares had traded at between RM 1.50 and RM 2 per share.  The steep
increase in its price since then indicated speculative trading in MTC
shares and investors' anticipation of impending arrangements for the
local subsidiaries which might lead to enhancement in the value of MTC.

The Managing Director of British American Tobacco plc, Mr Ulrich Herter
said: 'I am pleased that Rothmans Malaysia and MTC have been able to
agree the terms of a deal.  The terms enable shareholders of both
companies to benefit from the global merger between British American
Tobacco and Rothmans International.'

Board Members of Rothmans Malaysia

Following completion of the transaction, the Board of Rothmans Malaysia
will comprise:
Non-executive directors:
-    Tan Sri Abu Talib Othman, as Chairman
-    Tan Sri Kamarul Ariffin Mohamed Yassin
-    Mejar Jen (Rtd) Dato Haji Fauzi Hussain
-    Dato Haji Mohd Noor Ismail
-    Mr Oh Chong Peng
-    Mr Brian Barrow.

Executive directors:
-    Mr Stuart Watterton, as Managing Director
-    Mr James Irvine, as Finance Director
-    Dato Phan Boon Siong, as Brand Marketing Director
-    Mr Chan Choon Ngai, as Production Director
-    Syed Agil Syed Ali, as Trade Marketing Director
-    Mr Teh Choong Eng, as Leaf Director
-    Syed Hussain Syed Husman, as Human Resources Director
     
The Board of MTC will remain in place to oversee the transaction until
completion and identify the best course of action for the cash-rich
shell in the interests of MTC shareholders.

The present Managing Director of Rothmans Malaysia, Mr Nigel Buck, and
Mr Ken Sheridan, the present Finance Director of Rothmans Malaysia, will
leave the Board following completion.  Mr Buck, who has been with
Rothmans for more than 20 years, will retire, while Mr Sheridan is
approaching the end of his planned secondment to Malaysia. Given his
track record and experience, the British American Tobacco group plans to
transfer him to another senior post within their enlarged worldwide
organisation.

Mr Watterton joined British American Tobacco in 1972 and has served on
various assignments in Central America, Europe, Africa and the
Caribbean. In April 1988 he joined the Board of British-American Tobacco
Company as Finance Director.  He is currently the Chief Executive of
W.D. & H.O. Wills Holdings Limited, in Australia, a position he has held
since January 1, 1996.

Commenting on the proposed Board changes, Chairman Tan Sri Abu Talib
Othman said: ' I look forward to welcoming Mr Stuart Watterton, Mr
Irvine and Mr Barrow to our Board, and look forward to their
contributions given their substantial worldwide experience within the
British American Tobacco group. I and my fellow directors would like to
extend our thanks to Nigel Buck and Ken Sheridan for their dedicated
service to the company.'

Intention to change company name

In line with the parent company merger, it is envisaged that the
enlarged company will change its name to British American Tobacco
(Malaysia) Bhd at a date to be confirmed post-completion.

Advisers

Commerce International Merchant Bankers Berhad (CIMB) is the adviser to
Rothmans Malaysia, while Arab-Malaysian Merchant Bank Berhad is the
adviser to MTC.  The independent directors of Rothmans Malaysia have
appointed Perdana Merchant Bank Berhad as advisers for the minority
shareholders of Rothmans Malaysia, while Perwira Affin Merchant Bank
Berhad will act for the minority shareholders and independent directors
of MTC.
     
About Rothmans Malaysia

Rothmans of Pall Mall (Malaysia) Berhad was incorporated on September
11, 1961 in Malaysia.  The Company was listed on the Main Board of the
Kuala Lumpur Stock Exchange (KLSE) on October 27, 1961.

It is principally involved in the manufacture, importation and sale of
cigarettes, pipe tobaccos, cigars, the sale and distribution of luxury
consumer products and the provision of travel services.

Rothmans Malaysia manufactures and markets Malaysia's leading cigarette
brand, Dunhill. Its other brands include Peter Stuyvesant, Perillys,
Rothmans and Winfield. For its financial year ended March 31, 1999
Rothmans Malaysia recorded a turnover of RM1.95 billion and a pre-tax
profit of RM616.6 million.

About MTC

Malaysian Tobacco Company Bhd (MTC) was incorporated on September 28,
1956, and listed on the Main Board of the Kuala Lumpur Stock Exchange
(KLSE) on July 1, 1978.

MTC is principally involved in the manufacture, importation and sale of
cigarettes and other tobacco products in Malaysia.  Through its
subsidiaries, MTC is involved in the marketing and distribution of
cigarettes, and the provision of travel services.

British American Tobacco brands manufactured and marketed under licence
by MTC include Benson & Hedges, Kent, Pall Mall, Lucky Strike and State
Express 555. For its financial year ended December 31, 1998 MTC recorded
a turnover of RM525 million and a pre-tax profit of RM23.2 million.

About British American Tobacco

British American Tobacco plc is listed on the London Stock Exchange, and
the British American Tobacco group is the world's second largest
international tobacco group with operations in more countries than any
other cigarette group. Its portfolio of international tobacco brands now
includes State Express 555, Rothmans, Lucky Strike, Benson & Hedges,
Peter Stuyvesant, Dunhill, John Player Gold Leaf, Kent and Pall Mall.

In 1998, the group companies sold approximately 900 billion cigarettes,
representing over 16 per cent of the worldwide market.


Shareholder meetings

The transaction is conditional upon minority shareholder approvals for
both MTC and Rothmans Malaysia. Notices convening extraordinary general
meetings of the companies and giving further information on the
transaction will be sent to the respective shareholders in due course.



Issued on behalf of Malaysian Tobacco Company Berhad and Rothmans of
Pall Mall (Malaysia) Berhad by Edelman Public Relations Worldwide. For
further information, please contact :
Mr Ken Sheridan
Finance Director, Rothmans Malaysia
tel. no. 03 - 756 6899 or fax no. 03 - 755 8416
or
Puan Sharifah Rozita
Director of Corporate and Regulatory Affairs, MTC
tel. no. 03 - 221 3066 or fax no. 03 - 225 5643
or
Mr Aloysius Yap / Ms Christine Cheah at Edelman:
tel. no. 03 - 255 2277 or fax no. 03 - 255 0234