Reynolds Said to Be in Talks With Nicotine Gum Maker

Source from:  Bloomberg 11/10/2009

Reynolds American Inc., the second- largest U.S. tobacco company, is in talks to buy a Swedish maker of nicotine gum and mouth sprays to broaden its offerings beyond cigarettes, a person with knowledge of the discussions said. Reynolds, which makes Camel cigarettes and Grizzly snuff, wants to acquire closely held Niconovum AB as a way to reach consumers trying to stop smoking, said the person, who declined to be identified because the negotiations are private. Buying Niconovum would advance Reynolds Chairman and Chief Executive Officer Susan Ivey's push into nicotine products less harmful than cigarettes. The company is testing dissolvable tobacco tablets in the U.S. after introducing Swedish-style Camel snus earlier this year, Ivey told analysts Oct. 22. It bought snuff maker Conwood in 2006. "It is one indication of the changing nature of the nicotine business," David Sweanor, an adjunct professor of law at the University of Ottawa, said by telephone yesterday. He said he supports weaning nicotine users off cigarettes because of the harm associated with lighting up. Sweanor said he was told about the talks between Reynolds and Niconovum by people briefed on the transaction. The Wall Street Journal reported the talks yesterday, citing Sweanor. Sweanor said the value of the deal may be 30 million euros ($45 million), the Journal reported. Maura Payne, a Reynolds spokeswoman, said today that the company doesn't comment on speculation. Nicotine Substitutes Niconovum, based in Helsingborg, makes Zonnic gum and mouth spray to reduce "cigarette craving," according to its Web site. It was formed in 2000 by Karl Olov Fagerstrom, who previously worked on developing the Nicorette brand. R.J. Reynolds Tobacco Co., Reynolds' cigarette division, generated $1.87 billion, or 87 percent of the company's revenue, in the third quarter. The Winston-Salem, North Carolina-based company, incorporated in 1890, first made chewing tobacco and now ranks second in U.S. sales behind Altria Group Inc., the maker of Marlboro cigarettes and Skoal snuff. Reynolds gained 50 cents to $49.10 at 4 p.m. in New York Stock Exchange composite trading. The shares have advanced 22 percent this year. Enditem