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Reynolds in Talks to Buy Smoking-Cessation Products Maker Deal for Swedish company Niconovum reportedly in works
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WINSTON-SALEM, N.C. -- Reynolds American Inc. is said to be in advanced talks to buy a Swedish maker of products that help people stop smoking, a move that could signal a profound shift in direction in the global tobacco industry, reported The Wall Street Journal. Reynolds, the second-largest U.S. cigarette maker by sales, is near a deal to buy closely held Niconovum AB, according to David Sweanor, a Canadian law professor and tobacco expert who said he was briefed by people close to the deal.
Niconovum, based in Helsingborg, makes nicotine-replacement therapies such as Zonnic pouch and Zonnic gum, said the report. The company, whose products are not currently sold in the United States, was formed in 2000 by Karl Olov Fagerstrom, an expert in nicotine dependence who has been involved in such products as Nicorette gum.
The potential deal would mark the latest and most dramatic move by Reynolds into nicotine products that represent alternatives to cigarettes, said the report. Sales of cigarettes in the United States have been declining for years, prompting Reynolds to move into products that studies have shown present much smaller health risks than cigarettes.
Reynolds, for example, sells a number of smokeless-tobacco products, including Camel Snus, a type of spit-free tobacco that satisfies nicotine cravings but exposes users to less risk than does smoking.
Reynolds and other tobacco companies, including U.S. industry leader Altria Group Inc., Richmond, Va., have owned pharmaceutical businesses, but none yet market or sell an approved smoking-cessation product, the newspaper said.
Reynolds controls about 28% of the U.S. cigarette market by volume, while Altria has about 50%, said the report.
If Reynolds were to acquire Niconovum, it is unclear whether and how soon its product might be introduced in the United States. The products would have to be approved by the federal Food & Drug Administration (FDA). In addition to regulating smoking-cessation devices and other medical products, the FDA earlier this year began regulating cigarettes and other tobacco products for the first time.
On its website, Niconovum says it sees a marketplace for products that "will deliver nicotine more quickly and effectively," thereby "giving the consumer a perceived better control of cravings."
Smoking-cessation products typically have been made and marketed by pharmaceutical companies including GlaxoSmithKline and Johnson & Johnson, said the report.
Niconovum has been on the sales block for some time, people familiar with the matter told the Journal. Sweanor told the paper that he was told by people involved in the discussions that the deal could be valued at 30 million Euros ($44.5 million U.S.).
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Reynolds, for example, sells a number of smokeless-tobacco products, including Camel Snus, a type of spit-free tobacco that satisfies nicotine cravings but exposes users to less risk than does smoking.