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The real winner in the Lorillard takeover: BAT

Big Tobacco will have reason for a celebratory smoke if the merger of Reynolds American and Lorillard goes through. But the real victor may be on the other side of the Atlantic.

After several months of press reports about a potential deal, Reynolds announced Tuesday it would buy rival Lorillard in a cash-and-stock deal valued at $27 billion. As part of the arrangement, London-based British American Tobacco (BAT) will buy $4.7 billion worth of Reynolds shares so that its stake in the U.S. company holds steady at 42 percent.

The strategic benefits to Reynolds and Lorillard are clear. The companies have complementary footprints in the U.S. as well as plenty of overlapping overhead costs that can be slashed. Investors have already been betting on those benefits coming through, with shares of Lorillard rising nearly 30 percent between the start of the year and Monday's close.

Read MoreReynolds to acquire rival Lorillard, ditch Kool

Simon Dawson | Bloomberg | Getty Images

But it's hard to imagine investors getting much more out of the U.S. stocks. Indeed, antitrust regulators could create headaches over the next several months and there's a chance that Lorillard will be hurt by menthol regulations affecting its market-leading Newport cigarettes. With no real news to impress investors, Lorillard shares fell 8 percent on the official announcement Tuesday.

The more elegant part of the deal was BAT's move to keep its stake at 42 percent. According to people familiar with the matter, BAT had some leverage over Reynolds that has helped it through negotiations over the last 18 months. Reynolds was created in 2004 when BAT merged its Brown & Williamson division with R.J. Reynolds. That merger, which left BAT with its current investment in Reynolds American, included a standstill agreement preventing the British company from increasing its stake until July 30.

It's no coincidence that the deal happened just before that date. By giving its blessing for the Lorillard deal just before the standstill expired, BAT gave Reynolds a license to grow on its own before becoming vulnerable to a takeover by the British company. In exchange, BAT gets plenty of benefits.

Read MoreBig Tobacco merger could light up more dealmaking

First, BAT has solidified its position in a larger company without paying a premium. Second, it has left itself the option of coming back to buy the rest of Reynolds in a few years without worrying about a competing bidder. After all, 42 percent is easily a large enough stake to prevent another buyer from sneaking in to gobble up Reynolds.

In the meantime, BAT has plenty of scope to improve its business internally. While BAT has a very strong position in important markets like Brazil and South Africa, it doesn't appear to be living up to its potential. BAT's operating margins are about four percentage points lower than those of either Imperial Tobacco or Philip Morris International, according to Jefferies analyst Martin Deboo. BAT declined to comment.

BAT may also prefer to pursue deals elsewhere. Imperial Tobacco, which picked up some Reynolds brands as part of Tuesday's deal, has strong distribution platforms in Europe that would help BAT get a bit closer to market leader Philip Morris International. BAT has reviewed such a deal in the past, people familiar with the matter say.

Read MoreBig tobacco: Sorry. So, can we grow now?

Imperial remains the cheapest major international tobacco company, trading at about 13 times consensus earnings for the year through September. A reasonable price would make a deal all the more feasible.

BAT would probably need to split Imperial with another buyer like Japan Tobacco to get antitrust clearance. But such deals have been done successfully before: The Seagram spirits empire was divided between Diageo and Pernod Ricard back in 2000 for similar antitrust reasons.

None of these potential M&A moves are likely to happen before the current deal closes. But given the clear logic of the alternatives at BAT's disposal, shareholders should stay hooked for some time.

—By CNBC's John Jannarone.

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