Elliot Raises Stake in Swedish Match Again

Elliott Management Corp. raised its stake in Swedish Match to over 10 percent on Oct. 28. The move came one week before the Nov. 4 deadline when shareholders must decide whether to accept Philip Morris International’s takeover bid for the Swedish company.

In May, PMI bid about $16 billion for Swedish Match. Swedish Match’s board of directors recommended shareholders accept the offer, but some investors, including Elliott Management Corp., objected, saying the bid undervalues their firm.

Earlier this month, PMI increased the price of its bid to SEK116 ($10.34) per share from the SEK106 per share offered in May. Swedish Match’s board of directors advised shareholders to accept PMI’s revised offer.

Under Swedish law, PMI needs 90 percent of shareholders to agree to the deal in order to get full control over the company.

By increasing its stake to 10.5 percent from 7.25 percent previously, Elliott could scupper the deal if it rejects the offer. When it announced its sweetened bid, PMI indicated it would not further increase the price of its revised offer.

PMI also has the option to reduce the acceptance threshold and take a majority stake in order to prevent the bid from failing.

Speaking to Reuters before Elliott disclosed the higher stake, Swedish Match CEO Lars Dahlgren said that he believed the company could thrive by itself or together with Philip Morris.

“I believe we have exciting prospects as a standalone company, but I see exciting opportunities with a potential combination,” he said.