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With Purchase, Reynolds Moves Into Smokeless Tobacco Market  

Reynolds expects the deal to add to earnings, but did not update its earnings forecast. Reynolds, which makes Camel and Kool cigarettes, ranks behind Philip Morris USA, a unit of the Altria Group, in the United States cigarette market. Reynolds said it would pay $300 million in cash and borrow $3.2 billion.

A Prudential analyst, Robert T. Campagnino, and a Citigroup analyst, Bonnie Herzog, said Reynolds paid a high price for Conwood.

Ms. Herzog said she nonetheless thought it was a good strategic move for Reynolds because it collected 25 percent of the smokeless market and kept Conwood out of the hands of Philip Morris, the maker of top-selling Marlboro.

"We believe this is an exciting opportunity," she said in a note to investors Tuesday. Ms. Herzog said the purchase would let Reynolds control the price of Conwood's deeply discounted Grizzly smokeless tobacco.

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