After months of trying to sell its rail leasing business, CIT pulled the plug on the auction, saying it no longer needed to do so.

CIT decided to keep its $4.5 billion rail franchise as a result of the progress it had made managing its balance sheet and strengthening its liquidity position, it said. 

“We are very pleased with the progress we have made in securing more than $11 billion in liquidity over the past five months,” CEO Jeffrey Peek said. 

Sources told us last month that the auction had become a bit of a drag. The credit crisis was making it difficult for potential buyers to come up with financing. And GE spoiled the party by putting its own rail car business on the market around the same time, so that the two units were competing for buyers. GE may also have an advantage luring buyers, as it can possibly provide at least some seller financing for its business.

These businesses can be attractive. Returns on investment for rail car leases are often over 15 percent a year and with the price of scrap metal rising, the value of rail cars is also rising.

But in these conditions, finding somebody to pay a premium can be tough.

(Photo credit: Reuters)

In a deal that will bring together the Marlboro cigarette and Skoal moist snuff brands, Altria Group Inc will buy UST Inc, the largest U.S. smokeless tobacco maker, for $10.4 billion, or $69.50 a share, to expand in a growing market. It will also assume about $1.3 billion in debt to acquire UST.

The Huntsman v Hexion drama is underway in a Delaware courtroom, and the Wall Street Journal’s Deal Journal reports that some analysts, desperate for ring-side seats, have gone as far as to hire people to wait in line for them. But the proceedings have otherwise been drab, the blog reports. The hedge fund analysts, and everyone else in the courtroom for that matter, are eager to find out whether Apollo Management-owned Hexion Specialty Chemicals can walk away from its $6.5 billion deal to buy Huntsman because of Huntsman’s financial performance.

Other deals of the day:

** Egyptian telecoms operator Orascom is looking at buying Telekom Austria and has been in touch with the company and the Austrian government, its main shareholder, a newspaper reported on Monday. The deal could be structured as a merger of Orascom and Telekom Austria under which Austria’s government holding company OeIAG would keep a stake in the merged company.

** Australia’s Origin Energy Ltd struck a joint venture deal with U.S.-based ConocoPhillips and promised an extra shareholder payout, a move that could either defeat an $11 billion bid from Britain’s BG Group Plc or force a higher offer. Conoco would contribute up to $8 billion toward a 50-50 joint venture that will develop the massive coal-seam gas (CSG) assets and build a liquefied natural gas (LNG) project.