UPDATE 1-Altria completes UST acquisition

CHICAGO, Jan 6 (Reuters) - Altria Group Inc MO.N said on Tuesday it completed its $10.4 billion acquisition of UST Inc UST.N, greatly expanding Altria's presence in the faster-growing smokeless tobacco segment.

Altria, which owns Marlboro cigarette maker Philip Morris USA, will pay UST shareholders $69.50 a share and will also assume $1.3 billion in debt as part of the deal.

Altria and rival Reynolds American Inc RAI.N have been expanding the offerings of smokeless tobacco products in recent years as they try to find new sources of revenue in the face of a shrinking U.s. cigarette market.

Altria held off on closing the deal until 2009 at the suggestion of its lenders, a sign of how tight the credit markets had become last fall.

Altria shares were up 16 cents, or 1 percent, at $15.54 in Tuesday morning trading on the New York Stock Exchange. (Reporting by Brad Dorfman, editing by Dave Zimmerman)