Philip Morris, the world’s largest tobacco company, has offered C$2 billion (£99 million) for Rothmans, Canada’s second biggest cigarette maker.

The offer was conditional on Rothmans reaching an agreement with the Canadian government related to a cigarette smuggling investigation. Earlier today, Rothmans admitted to aiding smugglers in court and paid a $100 million fine.

The $30 a share bid by Philip Morris – at a 17 per cent premium to Rothmans’ 20-day average trading price on the Toronto Stock Exchange - has been recommended by the Rothmans board.

Philip Morris and Rothmans are already partners in a joint venture called Rothmans, Benson & Hedges, which distributes Benson & Hedges, Rothmans, Dunhill and Davidoff in Canada. Rothmans currently owns a 60 per cent interest. The remaining 40 percent is owned by Philip Morris, which, when the sale completes, will own the entire venture. The companies hope to complete the deal by the end of September.

Rothmans was not the only company to today admit to aiding tobacco smugglers. Imperial Tobacco Canada, a unit of British American Tobacco, also admitted in court to “aiding persons to sell and be in possession of tobacco manufactured in Canada that was not packed and was not stamped in conformity with the Excise Act and its amendments and ministerial regulations” and paid a C$200 million fine.

Rothmans was formerly owned by British American Tobacco, which bought its parent company in 1999 but sold its Canadian operations. It was founded in Quebec in 1899, and now employs 750 people around Canada.

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