Money world

Altria Group Inc (MO.N: Quote, Profile, Research, Stock Buzz) has agreed to buy UST Inc (UST.N: Quote, Profile, Research, Stock Buzz), the largest U.S. smokeless tobacco maker, for $10.4 billion in a deal that will combine the Marlboro cigarette and Skoal moist snuff brands.

Altria said on Monday it will pay $69.50 a share in cash and assume about $1.3 billion in debt to acquire UST, aiming to expand its own offerings from a shrinking U.S. cigarette market.

The price represents a 29 percent premium to UST’s closing price on Thursday, the day before news of a possible deal between the sides broke in The New York Times.

That was near the top of a range expected by some analysts, raising the question whether Altria was paying too full a price for a premium smokeless tobacco business that has been losing market share to Reynolds American Inc’s(RAI.N: Quote, Profile, Research, Stock Buzz) Conwood unit, which makes the Grizzly and Kodiak smokeless brands.

“It seems to me to be a fair and full price fast payday loans. I don’t think they are stealing UST by any stretch, but I don’t think they are grossly overpaying either,” said Matthew Kaufler, portfolio manager at the Touchstone Value Opportunities Fund, who has managed Altria and UST shares in the past.

UST shares were up 0.9 percent at $68.15 in early New York Stock Exchange trade. Altria shares rose 1.8 percent to $21.33.

UST, which also owns the Ste. Michelle Wine Estates, has long been seen as a likely acquisition target for Altria. Speculation over a possible deal revived in February as Altria was spinning off its international tobacco arm.

UST commands almost 58 percent of the U.S. smokeless tobacco market, as of the 26 weeks that ended June 14, according to the company’s latest earnings report. 

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