The buyer is Japan Tobacco (JT) who will now own the international rights for well known cigarette brands such as Camel, Winston and Salem.

This will allow Nabisco to separate its US tobacco and food businesses.

It is also going to spin off its US operations to shareholders, ending the 14-year amalgamation between RJ Reynolds Tobacco and Nabisco Brands.

But shares in JT dropped on the Tokyo stock market as investors grew concerned over the price of its new deal. It closed down ¥50,000, or 4.8% at ¥1m.

JT will soon be a global operation

JT is paying about 30% more for RJR Nabisco than analysts thought it might fetch. Its bid includes taking on $200m of RJR International's debt.

But RJR Nabisco Chairman Steven Goldstone said the food and tobacco businesses would achieve their potential much better under separate ownership.

RJR Nabisco ranks third among the world's tobacco producers in terms of volume sales, while JT ranks fourth. They are behind US-based Philip Morris and British American Tobacco (BAT).

The new deal will allow JT to tap into growing markets in Africa and comes as the Japanese tobacco market is dwindling.

Stiff competition

JT's offer is thought to have beaten off competition from Philip Morris of the US, Seita of France and Tabacalera of Spain.

Philip Morris said it had looked into the prospect "thoroughly" but tax and antitrust problems held it back.

Awareness of the health risks associated with smoking is spreading in Japan. A JT survey last year showed the percentage of Japanese adults who smoke has fallen for the third year to a record low of 33.6%.

"JT is trying to reach the same level as the multinational tobacco companies," said anti-tobacco activist Akinori Ito. "Sales in Japan are not going up and the economy is bad."

RJ Reynolds was bought by Nabisco for $4.9bn in 1985. At the time it was one of the largest corporate mergers in history.