Altria In Talks To Buy UST For $10B

September 6, 2008 11:07 a.m. EST

New York, NY (AHN) - Tobacco giant Altria Group, Inc., makers of Philip Morris and Marlboro cigarettes, is in talks with the US Smokeless Tobacco Co. in a deal worth more than $10 billion, reports said Saturday.

The Guardian reported that Altria plans to position in the growing chewing tobacco market, which UST dominates, as smokeless nicotine resurges its popularity. The tobacco firm was reportedly developing a smokeless version of Marlboro cigarettes.

UST, the country's largest maker of dipping tobacco and snuff, carries top brands Skoal and Copenhagen.

Loose tobacco is a growing segment in the tobacco industry as consumers look for alternatives to smoking as more public places become non-smoking areas. In the 1990s, Skoal was banned in the U.K. as it was found to be carcinogenic.

The U.S. smokeless tobacco market was reported to be worth about $3.7 billion annually, relatively small compared with to the $70 billion spent on cigarettes every year. However, cigarette sales are dwindling, according to the Guardian.

The Financial Times reported Altria and UST have been working on a merger in the past but were unsuccessful due to disagreements over pricing.