Philip Morris increases offer for Swedish Match- Newshubweek

Philip Morris increases offer for Swedish Match
Written by Arindam

Philip Morris International has increased its offer for smokeless tobacco specialist Swedish Match, pushing the price it is prepared to pay up by just under 10 per cent as it seeks to expand in cigarette alternatives.

The increased offer comes after hedge funds built a stake in Swedish Match. US group Elliott Management has built a 7.25 per cent stake in the Swedish company, according to Bloomberg data.

PMI offered SKr106 per share for Swedish Match in May, but on Thursday increased that to SKr116 per share, valuing the target’s equity at about SKr176bn ($15.7bn).

PMI said it would not increase the offer further. It added that the new offer was a 52.5 per cent premium to the group’s share price before the original offer was made in May. Swedish Match shares closed at SKr110.3 on Wednesday.

PMI chief executive Jacek Olczak said that the new price “primarily reflects the higher net value to PMI . . . given currency movements since the initial offer was announced in May.”

“We believe that the deterioration in the global economic outlook, equity markets and the interest rate environment since the time of the initial offer strengthens yet further the attractiveness of the revised offer,” he added.

Swedish Match produces snus, a popular tobacco product in Scandinavia, and oral nicotine pouches, which are the fastest growing alternative nicotine category.

The Stockholm-based company’s Zyn product is the largest nicotine pouch brand in the US. Sales of Swedish Match’s pouches increased more than 50 per cent last year in the US and Scandinavia.

Separately, PMI agreed on Wednesday to pay tobacco group Altria about $2.7bn for the US commercialisation rights for IQOS, a line of ecigarettes.

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