The Charlotte Observer reported Sept. 22 that Reynolds is weighing a move that would give the company a toehold in the $3.5-billion smokeless-tobacco market, currently dominated by UST. Philip Morris also is reportedly interested in getting into the smokeless market.

"It is very clear that smokeless is a growing segment in the tobacco category," said Reynolds CEO Susan Ivey said. "Certainly that would be within our scope."

Rick Jones, a money manager at BB&T Asset Management Inc., noted: "Strategically it makes sense because they're selling one tobacco product, so why not sell a second?"

Even as U.S. cigarette smoking has declined, and domestic cigarette production fell 3 percent, sales of smokeless tobacco rose 6 percent last year. "We're not surprised by Philip Morris' and R.J. Reynolds' interest in getting into smokeless," said UST spokesperson Mark Rozelle. "It's the only growing area in the tobacco business."

Experts say smokeless tobacco has gained popularity because it can be used in the workplace and other places where smoking is banned. "It's something you can do while you're sitting here," said Ivey said during an interview in an office in New York City. "It's spitless nowadays."

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