SHARES in global tobacco giant BAT, which employs more than 1,300 workers at its Southampton cigarette factory, have leapt up after regulators removed a major hurdle to a merger involving the company's US operation.

The group, whose brands include Kent, Dunhill and Lucky Strike, has just discovered that its plan to combine its US subsidiary Brown & Williamson with larger rival RJ Reynolds was acceptable to the US Federal Trade Commission.

The unanimous support of Commission members caused shares to rise six per cent, as investors expressed relief at an answer to tough trading conditions in the US.

The merger - due to be completed by the end of July - creates a bigger rival to market leader Philip Morris, holding about 30 per cent of the sector, and bringing together the second and third largest tobacco companies in the country.

BAT chairman Martin Broughton, who leaves on July 1 to become chairman of British Airways, said he was delighted that the uncertainty over the planned merger was now over.