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• Reynolds American Agrees to Buy Conwood for $3.5 Bln (Update8) 

Reynolds American Inc., the second- largest U.S. cigarette company, will jump into the smokeless tobacco market by buying Conwood, maker of the Kodiak and Grizzly brands, for $3.5 billion.

The purchase will give Reynolds the second-largest U.S. manufacturer of snuff and chewing tobacco, the Winston-Salem, North Carolina-based company said in a statement. Conwood is being sold by Chicago's Pritzker family, which controls assets including the Hyatt hotel chain.

Reynolds, the maker of Camel, Doral and Winston cigarettes, is trying to hold on to customers switching to smokeless brands such as UST Inc.'s Copenhagen and Skoal as restaurants and employers ban smoking. The purchase may spur rivals including Altria Group Inc. to enter the $3.8 billion-a-year market, which is growing 5 percent a year.

``The smokeless business is attractive for its growth,'' said Herb Achey, an analyst at New York-based U.S. Trust, which owns Altria, Reynolds and UST shares among about $107 billion in assets. ``We view it as a strategic initiative for Reynolds and Philip Morris.''

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