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• R.J. Reynolds Bids for Rothmans Inc. Target Santa Fe (Update1)  

R.J. Reynolds Tobacco Holdings Inc., the No. 2 U.S. tobacco company, offered $319 million for Santa Fe Natural Tobacco Co., topping a bid by Canada's Rothmans Inc. for the producer of organic cigarettes.

Rothmans, Canada's second-biggest cigarette maker, is considering raising its $275 million stock, cash and debt bid, which was announced Sept. 28, Rothmans spokesman John McDonald said. Closely held Santa Fe said its board will recommend the R.J. Reynolds offer to shareholders on Nov. 29 unless Rothmans antes up more, McDonald said.

Government restrictions on advertising make it difficult for tobacco companies to increase sales in Canada, pushing Rothmans to look south of the border. A purchase of Santa Fe would mark the first U.S. acquisition for the Toronto-based company, which controls about a quarter of the C$2.4 billion ($1.5 billion) Canadian tobacco market with brands such as Benson & Hedges and Craven `A.'

``We have just received within the last 24 hours notification, so we're looking at all of our options,'' McDonald said. He wouldn't elaborate.

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