The move also allows Japan Tobacco Inc., the world's third-largest cigarette company, to expand outside of Japan, which has seen declining smoking rates.
Meanwhile, the number of mergers and acquisitions in Japan has risen in recent years as the nation frees up its regulations to keep up with global competition.
The takeover of Gallaher, the maker of Silk Cut and Benson & Hedges cigarettes, also takes Japan Tobacco into a Western European market, where it now has little presence, creating a tobacco empire with annual global output of 600 billion cigarettes.
Tokyo-based Japan Tobacco, the overseas distributor for Winston, Camel and Salem cigarettes, and Gallaher Group PLC had been expected to complete the deal, announced in December.
JT acquired the shares at 1,140 pence each, for a total of 7.5 billion pounds, or US$15 billion, and assumed an additional debt of about 2 billion pounds (US$4 billion) under the deal, the company said.
"I am pleased to welcome Gallaher and its employees into the JT Group," said Chief Executive Hiroshi Kimura. "This acquisition is a significant milestone in the development of JT's international tobacco business."
The move will deliver economies of scale, strengthen the company's market position and growth opportunities, he said.
It will also help Japan Tobacco, which makes Mild Seven cigarettes, obtain technology and balance its international operations by adding to its turf Gallaher's markets, including Great Britain, Austria and Sweden, according to JT.
In 2005, JT was No. 3 in global market share, with 7 percent, behind Altria of the U.S. with 18 percent, and British American Tobacco with 12 percent.
With the latest purchase, it can hope to add Gallaher's 3 percent market share, but will remain No. 3, JT said.
Altria owns Philip Morris USA, maker of Marlboro cigarettes, and sold its stake in food maker Kraft earlier this year. British American Tobacco PLC makes Lucky Strike, Kent, Dunhill and Pall Mall cigarettes.
The JT deal was approved by Gallaher shareholders March 9, and was granted final court approval Tuesday. It has also won regulatory approval in the European Union and other countries, according to JT.
A plan for integrating the operations is being set up, to be completed in August. JT's head of international operations, Pierre de LaBouchere will head the new executive committee to integrate Gallaher into JT, the company said. The committee also includes two former Gallaher executives, Stefan Fitz and Eddy Pirard.
JT's takeover of Gallaher is the biggest acquisition of a foreign company by a Japanese one, exceeding Japanese broadband and telecommunications company Softbank Corp.'s purchase of British telecom Vodafone Group PLC's Japanese operations for 1.75 trillion yen (US$14.7 billion; EUR10.9 billion) last year.
Acquisitions involving Japanese companies taking over foreign companies totaled 412 last year, or about 15 percent of the overall more than 2,700 M&As in Japan, and up from just 77 in 1985, according to Recof Corp., which offers M&A services.
There were 171 cases of foreign companies taking over Japanese companies, making up 6 percent of the total, and up from 21 in 1985, Recof said.
Gallaher, which employs more than 11,000 people worldwide, dates back to 1857, when Tom Gallaher started a business making Irish roll tobacco in Londonderry, Northern Ireland.
But it has been under pressure in Europe from additional taxation and competition, as well as by bans on public smoking in Scotland and other places.
JT shares, which have been rising steadily over the past year, lost about 0.8 percent to finish at 605,000 yen (US$5,100; EUR3,800) in Tokyo.
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