Altria Group to Acquire UST Inc.

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Altria Group to Acquire UST Inc.

RICHMOND, Va. -- Altria Group, Inc. and UST Inc. entered into a definitive agreement yesterday for Altria to acquire all outstanding shares of UST, the world's leading moist smokeless tobacco manufacturer.

"This is a very exciting day for us," Michael E. Szymanczyk, chairman and chief executive officer of Altria said during a conference call today. "[The deal] is strategically and financially compelling—it creates a premiere tobacco platform with premium brands across multiple tobacco categories."

According to the terms of the agreement, shareholders of UST will receive $69.50 in cash for each share of common stock held. The transaction is valued at approximately $11.7 billion, which includes the assumption of approximately $1.3 billion of debt.

"This transaction is consistent with our growth strategy of making disciplined investments in adjacent categories. UST provides Altria with the leading premium brands, Copenhagen and Skoal, in the highly profitable MST category. We will also acquire Ste. Michelle Wine Estates, a premium wine business, as part of the transaction," Szymanczyk said in a statement.

Murray Kessler, chairman and chief executive officer of UST explained in a statement that upon completion of the transaction, Altria's operating companies will offer premium tobacco products including Marlboro, Copenhagen, Skoal and Black & Mild.

"This is a historic day for UST shareholders," Kessler said during the conference call. "I believe Altria is paying a fair and attractive price to UST shareholders." He continued: "Altria will benefit from a talented, dedicated and knowledgeable group of employees that have tremendous expertise in the smokeless and wine categories."

Moving forward, Kessler's said UST's "growth strategy will clearly be enhanced by Altria's resources and infrastructure."