Imperial Brands PLC (LSE:IMB) shares reversed earlier losses to trade higher on Wednesday afternoon when the tobacco group revealed it will spent at least $150 million (£111.6 million) buying US nicotine pouch company Black Buffalo.
The maker of Golden Virginia tobacco, Winston cigrettes and Blu vapes said the acquisition would strengthen its position in the rapidly growing US "oral nicotine" market.
Its next-generation products portfolio would be widened beyond its existing Zone nicotine pouch brand.
Black Buffalo, founded in 2015 and based in North Carolina, produces tobacco-free alternatives to traditional moist smokeless tobacco products aimed at adult consumers.
Its products are made using US-grown leafy greens combined with pharmaceutical-grade nicotine, sold as pouches or loose as 'dipping' tobacco.
Imperial said the transaction also included additional deferred payments linked to Black Buffalo’s performance over the next three years.
Chief executive Lukas Paravicini said the deal reflected the group’s “disciplined and focused approach” to expanding in markets with attractive long-term growth opportunities.
The acquisition comes as tobacco companies continue investing heavily in smokeless and alternative nicotine products amid declining cigarette consumption.
Imperial said Black Buffalo would immediately become part of its portfolio, with the US company’s management team joining the group.
The FTSE 100 company added that the purchase remained consistent with its capital allocation policy and would not affect its ongoing multi-year share buyback programme.