Elliot Investment Management is building a stake in Swedish Match and plans to oppose the pending takeover of the Scandinavian tobacco company by Philip Morris International under its current terms, according to Bloomberg.
In May, Swedish Match’s board of directors accepted Philip Morris International’s offer of SEK161.2 billion ($16.14 billion), which is subject to shareholder approval. Financial analysts said a deal has strategic merit for PMI given the Swedish Match’s strength in oral nicotine products and exposure to the lucrative U.S. tobacco market.
It’s unlikely that Elliott will succeed in building a large enough stake in Swedish Match to stop the deal on its own, according to Mads Rosendal, an analyst at Danske Bank.
“Even if they were to be successful in blocking the deal it would not necessarily be bad for Swedish Match spreads, as they were trading tighter than PMI before the deal announcement,” he wrote in a research note Friday.
Earlier this year, Swedish Match shareholder Bronte Capital also opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.
Another shareholder has also said it was not clear whether the long-term value of Swedish Match was reflected in PMI’s offer price.
Some 90 percent of shareholders need to agree to the deal for it proceed under Swedish law.