Altria Group, corporate parent of Philip Morris USA, is well advanced in talks to acquire UST, maker of the Skoal and Copenhagen smokeless tobacco brands, for more than $10 billion, the New York Times has reported.

The deal could still fall apart, the newspaper emphasized. But executives involved in the transaction reportedly were prepared to work through the weekend to complete the transaction as soon as Monday. Speculation about the deal commenced Thursday when UST’s CEO, Murray S. Kessler, abruptly withdrew from an analysts’ conference, prompting a brief surge in the share price and heavy options trading.

UST, which has a market capitalization of $8 billion, would represent Altria's second major acquisition -- last year the tobacco giant acquired John Middleton, a maker of cigars and pipe tobacco -- after years of shedding non-tobacco and non-domestic assets. As of yesterday, Altria had a market cap of $43 billion.

Analysts are bullish on the deal, noting that a combination of the two companies would yield massive cost savings by eliminating redundancies in marketing and distrubuting products to the same stores. Additionally, observers note that Altria’s strategy of penetrating the growing market for smokeless products has been difficult. Extending the Marlboro brand to moist smokeless tobacco and snus has yet to see much success.

Acquiring UST would give Altria about 60 percent of U.S. shipments of snuff, a $3.7 billion industry that's growing about 7 percent a year. Altria expects cigarette consumption to decline 3.5 percent this year, forcing it to play catch-up to UST and Reynolds American Inc.’s Kodiak and Grizzly smokeless brands, reports Bloomberg.