WASHINGTON, September 8, 2008 (AFP) - US tobacco giant Altria Group said Monday it would buy UST, owner of smokeless tobacco brands Skoal and Copenhagen and a wine company, in a cash-and-debt deal worth 11.7 billion dollars.

Altria, the largest US cigarette maker whose best-known brand is Marlboro, said it is offering 69.50 dollars in cash per share, representing a 28.9 percent premium based on the UST share price average of the past three months.

The agreed transaction is valued at approximately 11.7 billion dollars, which includes the assumption of about 1.3 billion dollars of UST's debt, Altria said in a statement.

'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,' said Michael Szymanczyk, Altria's chairman and chief executive, said in the statement.

'We are excited about this strategic and financially attractive acquisition as it will enhance our ability to deliver superior shareholder return that is expected to exceed our 12 percent goal,' he said.

UST Inc. is a holding company for its principal subsidiaries: US Smokeless Tobacco Company and Ste. Michelle Wine Estates, which produces wines in Washington state, Oregon and California.

Altria said the deal with US is subject to UST shareholder approval and regulatory approvals.

The takeover would be Altria's first acquisition since it sold its Philip Morris International subsidiary in March.

The PMI spinoff was part of a restructuring program begun in 2007 that included the sale of Kraft Foods to focus on its more lucrative core tobacco activities.

Altria said the acquisition of UST should add to earnings within 12 months of closing and generate an estimated 250 million dollars in annual synergies by 2011.

Altria did not change its 2008 guidance for earnings per share from continuing operations in the range of 1.63 dollars to 1.67 dollars, a range that represents a growth rate of 9.0 percent to 11.0 percent from the prior year.

UST has a market value of eight billion dollars and reported a 2007 net profit of about 500 million dollars on revenue of 1.9 billion dollars.