Altria To Acquire UST Inc For $10.3 Billion

September 8, 2008 5:04 p.m. EST

New York, NY (AHN) - Cigarette maker Altria announced on Monday they will acquire UST Inc. for $10.3 billion in cash. UST Inc. is an industry leader in smokeless tobacco products.

The deal works out to $69.50 a share for all outstanding UST shares. Altria will also assume the company's debt obligations, adding another $1.3 billion onto the total cost.

UST sells chewing tobacco and is known most for its Skoal and Copenhagen brands. The deal enables Altria to become a major player in the smokeless tobacco market giving them two well established brands. UST will become a wholly owned subsidiary of Altria.

As sales of cigarettes have declined roughly 3 percent to 4 percent a year; smokeless tobacco sales are growing 5 percent to 6 percent a year.

The Altria deal further consolidates the tobacco industry which has seen Phillip Morris acquire Canadian cigarette maker Rothmans Inc. recently and saw Reynolds acquire Conwood Co., a smokeless tobacco company, just two years ago.

Shares of UST rose 2 percent to $68.90 on Monday.