BAT is raising its offer for the 58 per cent of Imasco it does not already own to C$41.6 (pounds 18) a share from a minimum price of C$40, which was agreed when the deal was announced in August. BAT said it would sell the 824 Shoppers outlets for C$2.55bn to an investor group led by Kohlberg Kravis Roberts & Co.
The UK group will pay C$10.68bn (pounds 4.5bn) for the rest of Imasco in a deal that has been recommended by both the Imasco board and a specially established independent committee.
Purdy Crawford, chairman of Imasco and of the independent committee of its board of directors, said: "We believe that we have arrived at an attractive transaction."
Imasco shareholders have not yet voted on the deal.
BAT's intention is to sell off all Imasco's non-tobacco interests, leaving it with the Canadian company's main asset, Imperial Tobacco. Imperial has a dominant 69 per cent share of the Canadian cigarette market.
BAT has already agreed to sell Imasco's 92 per cent-owned CT Financial Services unit to Toronto Dominion Bank for C$7.85bn, leaving only its Genstar Development property concern to sell.