Altria seized control of the biggest chewing tobacco company in the United States yesterday for $10.4 billion (£6 billion) in cash, raising hopes that while Wall Street may be in the middle of a credit crisis, corporate America is bearing up.

The owner of Marlboro and Virginia Slims cigarettes said that it had agreed to buy UST, the group that manufactures smokeless tobacco, valuing the company at a chunky 29 per cent premium.

Smokeless tobacco is chewed rather than smoked. Also known as snuff, smokers place a lump of tobacco between their cheek and gum, allowing nicotine to be absorbed through their mouth.

Altria told UST investors that it is to pay them $69.50 for every share they own and take on $1.3 billion of the smokeless tobacco group’s debt.

Michael Szymanczyk, chairman and chief executive of Altria, said: “The combination of Altria and UST creates the premier tobacco company in the United States, with leading brands in cigarettes, smokeless tobacco and machine-made large cigars.”

UST controls about 58 per cent of America’s chewing tobacco market, but has been losing business to Reynolds American, which owns the Grizzly brand of snuff.

While the recent loss of market share has raised questions on Wall Street about whether Altria has overpaid for UST, Matthew Kaufler, portfolio manager at the Touchstone Value Opportunities Fund, said: “It seems a fair and full price. I don’t think they are stealing UST by any stretch, but I don’t think they are grossly overpaying, either.”

Altria needed to buy UST because traditional smoking tobacco markets are shrinking as consumers seek alternatives to cigarettes, especially with widespread smoking bans in public places. In America, cigarette sales have declined by about 4 per cent every year. Yet smokeless tobacco is a growing industry: last year, UST reported annual sales of $1.95 billion.

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