NEW YORK – Reynolds American Inc. (RAI) on Tuesday agreed to acquire privately held Conwood for $3.5 billion, expanding the second biggest U.S. cigarette maker's reach into the smokeless-tobacco market.
Conwood, which makes Kodiak snuff and Levi Garrett chewing tobacco, had 2005 sales of more than $450 million and operating income of $250 million, Reynolds said. Memphis, Tenn.-based Conwood is the largest or second-largest player in each of the five categories of smokeless tobacco.
Reynolds, whose cigarette brands include Camel, Salem and Kool, expects the deal to add to earnings in "both the short and long term," but the company stopped short of updating its full-year guidance.
Reynolds, based in Winston-Salem, N.C., plans to combine Conwood with its Lane Limited unit, also based in Memphis. Lane Limited makes cigars, pipe tobaccos and premium international cigarettes like Dunhill.
The deal is expected to close by the end of the quarter, pending regulatory approval.