Tobacco deal
Reynolds America, the #2 cigarette company in the US, is about to buy Conwood Co., the #2 company in smokeless tobacco. The deal is for $3.5 billion.
Conwood is owned by the Pritzker family, which also owns the Hyatt hotel chain and the Marmon Group (described below), as well as other real estate holdings. The sale is part of a breakup of the company based on settlement agreement among a group of adult heirs.
Conwood, which has 25% share of the "moist snuff" subsegment, which in turns is growing t 5% a year. Other subsegments in the smokeless tobacco area are dry snuff, loose leaf, plug, and twist chewing tobaccos.
Conwood, which sells under the Grizzly and Kodiak brands, has grown steadily over the past few years. The #1 smokeless tobacco company is US Tobacco., which owns the brands Skoal and Copenhagen.
Unlike cigarettes, this segment is growing in the US, so it is a natural diversification for Reynolds American. Reynolds has already done into the pipe tobacco and premium cigarette markets. According to a Brandweek article ( "Reynolds Lights Up With Smokeless Tobacco Buy ", 4/25/08),
"besides giving Reynolds the No. 2 position in the smokeless market,, the buy also keeps it out of the hands of competitor Philip Morris, maker of Marlboro cigarettes"
About Marmon Group:
Marmon Group is essentially a holding company for over 100 manufacturing companies. Among the companies held are:
- Perfection Clutch, which produces new and remanufactured automotive components.
- Ecodyne Limited, which designs and manufactures water treatment equipment.
- Q-Matic, which makes conveyor ovens used by restaurants.
- Wells Lamont Corporation, which is the world's largest maker of work gloves.
- Aetna Insulated Wire, which manufactures copper wire and cable
- Union Tank Car Company, which is the largest manufacturer and lessor of railroad tank cars.
And that's just a random sampling.
7:30:35 PM 
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