Maker of Camels buys cigarette replacement seller

AP News
Posted: Dec 02, 2009 4:35 PM

Cigarette maker Reynolds American Inc. has reached a deal to acquire a Swedish company whose nicotine gum, pouches and spray help people stop smoking, the second-largest U.S. tobacco company said Wednesday.

The acquisition will let Reynolds offer products that can "reduce the risks of diseases and death caused by tobacco use," CEO Susan M. Ivey said in a statement.

Niconovum AB's products are sold outside the U.S. under the Zonnic brand. They could help the maker of Camel cigarettes and Grizzly smokeless tobacco keep growing as tax increases, health concerns, smoking bans and social stigma cut into demand for cigarettes.

The deal, which Reynolds expects to conclude by the end of the year, would be worth about $44 million. The Associated Press reported last month that the companies were in talks.

Karl Olov Fagerstrom, an expert on smoking cessation and nicotine dependence, formed Niconovum in 2000, according to its Web site.

Reynolds, which is based in Winston-Salem, N.C., said it will fund product development and testing required for Niconovum to enter markets outside of Sweden and Denmark. It intends to keep Niconovum's headquarters in Sweden and retain its leaders.

Under the Camel brand, Reynolds has introduced moist smokeless tobacco and snus _ small pouches like tea bags that users stick between the cheek and gum.

Reynolds also has introduced dissolving tobacco _ finely milled tobacco shaped into orbs, sticks and strips _ in test markets.