Marlboro Maker to Buy Chewing Tobacco Firm

The Marlboro cigarettes empire Altria is in talks to buy the US's biggest maker of chewing tobacco, UST, in a potential deal worth more than $10bn (£5.7bn) intended to capitalize on a resurgence in the popularity of smokeless nicotine.

Moist chewing tobacco and snuff, also known by the Swedish word snus, are among the few sectors of the industry still growing in the US, as consumers look for ways to get around a crackdown on smoking in public places.

UST, formerly the United States Tobacco Company, makes two of the top brands, Skoal and Copenhagen, although they are little known in Britain, where the promotion of chewing tobacco is severely restricted.

As news of takeover discussions between Altria and UST leaked into the market, UST's shares leapt by 24% to $67.10. Altria is tipped to be willing to pay about $70 a share, which would value the company at just over $10bn.

UST, which also owns a group of vineyards in Washington state, made profits of $520m last year from sales of $1.89bn.

Analysts said the deal would be a logical move for Altria, which has been working on a smokeless version of Marlboro cigarettes. "Smokeless tobacco is an area they've been interested in for a while now," said Esther Kwon, a tobacco analyst at Standard & Poor's equity research. "It's in what they call an adjacent category to cigarettes."

Worth about $3.7bn annually, the US market for smokeless tobacco is dwarfed by the $70bn spent on cigarettes every year - but cigarette sales are dwindling.

Skoal is sold as loose tobacco or in teabag-style pouches that are placed in the mouth intact; such pouches were banned in the UK in 1990 as carcinogenic.