Category: Business

Companies to Post ‘Corrective Statements’

Image: Wirestock | Adobe Stock
Tobacco companies will have to start displaying signs with “corrective” statements about the health effects and addictive nature of cigarettes at U.S. points of sale in the second half of 2023, according to the Department of Justice (DOJ), reports Fox News. A court order requiring the statements will take effect July 1, 2023, after which tobacco companies will have three months to start posting the statements for 21 months in English and Spanish.
The order “resolves the government’s long-running civil racketeering lawsuit against the largest United States cigarette companies,” according to the DOJ. The racketeering lawsuit was filed in 1999 and ended in 2005; however, the DOJ said the new court order is the last of several corrective remedies related to that case.
Altria Group, Philip Morris USA, R.J. Reynolds Tobacco Co. and four cigarette brands owned by ITG Brands are subject to the order. An estimated 200,000 of 300,000 retail stores in the U.S. that sell cigarettes have agreements with the tobacco companies. The order requires the companies to amend their agreements, requiring corrective statements to be placed at the stores on color signs that are eye-catching. Messaging will include adverse health effects of smoking, the addictive nature of nicotine and adverse health effects of secondhand smoke, among others.
“Justice Department attorneys have worked diligently for over 20 years to hold accountable the tobacco companies that defrauded consumers about the health risks of smoking,” said Associate Attorney General Vanita Gupta. “Today’s resolution implements the last remedy of this litigation to ensure that consumers know the true dangers of the smoking products they may consider purchasing.”
“This is an important moment in the history of cancer control in the United States,” said William Klein, associate director of the National Cancer Institute’s behavioral research program. “Smoking causes about 30 percent of all cancer deaths in the United States, and therefore, the court-ordered corrective statements appearing at the point of cigarette sale will help support our mission to reduce the burden of cancer. We are grateful to our colleagues at the Department of Justice for having completed this significant work.”
December 7, 2022
Philip Morris International to Delist Swedish Match

Photo: Tobacco Reporter archive
Philip Morris International plans to take Swedish Match off of the stock market now that it owns a large enough share of the company to initiate a compulsory redemption of remaining shares, according to Reuters.
“We are delighted to have obtained over 90 percent ownership of Swedish Match, allowing us to initiate a minority redemption process to acquire the remaining shares outstanding and request the delisting of the company from the stock market,” said PMI CEO Jacek Olczak in a statement.
“This transaction marks a major milestone in accelerating our shared objective of a smoke-free future. We look forward to welcoming Swedish Match’s employees and leading oral nicotine portfolio into the PMI family to create a global smoke-free champion, notably bringing IQOS and Zyn together in both the U.S. and international markets.
“We are very excited about the growth, value creation and progress in tobacco harm reduction that we believe can be achieved together over the coming years. Despite the increased cost of financing over recent months, we expect the combination to be low single-digit accretive to PMI’s adjusted diluted EPS in 2023, before potential revenue synergies and excluding transaction-related and one-off costs and the amortization of acquired intangibles.”
In May, PMI submitted a $16 billion takeover bid for Swedish Match. The bid initially received pushback from Elliott Management, Framtiden and other stakeholders as they felt that it undervalued the company. PMI later raised its bid from SKK106 ($10.21) per share to SKK116 per share. Elliott Management, Framtiden and the other shareholders agreed to tender their shares after the bid was raised, and PMI secured over 83 percent approval by the end of the initial offer period.
November 28, 2022
Shares Sold in Imperial’s Former Russia Unit

Photo: Imperial Brands
Russian businessman Sergei Katsiev has acquired a 15 percent stake in International Tobacco Group, the former Russian subsidiary of Imperial Brands, reports Interfax, citing data from the Unified State Register of Legal Entities (USRLE).
In March, Imperial Brands announced that it was suspending operations in Russia, including production at its factory in Volgograd, sales and marketing, in response to Russia’s military assault on Ukraine. In April, the company said it had transferred its business in Russia to local investors.
Earlier this year, Imperial Tobacco Sales and Marketing and Imperial Tobacco Volga were renamed International Tobacco Group and International Tobacco Group Volga, respectively.
According to the USRLE, Nikolai Tyaka owns 75 percent of International Tobacco Group and International Tobacco Group Volga.
Following the Feb. 24 invasion, international cigarette manufacturers announced they would end their operations in Russia, but retreating from such a major market is easier said than done. Tobacco companies have had to carefully navigate shifting regulations and avoid missteps that could prompt the government to seize the business, for example—all the while trying to protect employees from becoming targets for arrest.
Tax payments by the leading international cigarette manufacturers have provided the Russian government with at least $7.25 billion in additional income since President Vladimir Putin ordered his army to attack Ukraine, according to an analysis of Russian Treasury figures conducted by The Telegraph.
Because Russia and Ukraine were relatively small markets for Imperial Brands, representing around 2 percent of net revenues and 0.5 percent of adjusted operating profit in 2021, the company may have found it easier to extract itself from Russia than some of its larger competitors.
November 9, 2022
KT&G Partners with Mirae Financial Group
KT&G and Mirae Asset Financial Group have created the New Growth Investment Partnership No. 1 to identify and develop new business areas.
“We are forming a strategic alliance with Mirae Asset for investment in new-growth industries in order to secure sustainable growth in the midst of the rapidly changing business environment and to identify businesses of new plant species,” said Lee Woong-kyu, a representative of KT&G’s growth and investment department, in a statement.
He explained that KT&G will invest in new business areas while strengthening the capacity of its existing businesses.
October 18, 2022
Myle Vape Opens Dubai Office

Photo courtesy of Myle Vape
Myle Vape has opened an office and warehouse facility in Dubai to service its customers in the Middle East. The United Arab Emirates is one of Myle Vape’s most important markets in terms of brand loyalty and market share.
“This move has been in the works for some time, and we could not be happier to announce this opening,” said Myle Vape co-founder and CEO Ariel Gorelik in a statement. “We have been operating from afar for too long, traveling back and forth from the USA multiple times a year, and it has become critical to the growth of our business that we made a serious move to [build] a major operations center in the UAE.”
Launched in 2015, Myle Vape manufactures disposables, pod systems, rechargeable devices and vape accessories that are distributed globally outside the United States.
September 23, 2022
Framtiden Opposes PMI Bid for Swedish Match

Photo: Swedish Match
Framtiden Management Co. announced its opposition to the proposed takeover of Swedish Match by Philip Morris International. The Framtiden Partnerships own over 14.5 million shares representing about 1 percent of outstanding shares.
As a long-term Swedish Match shareholder since 2003, Framtiden believes that the acquisition offer of SEK106 per share deeply undervalues the company, which Framtiden estimates to be worth nearly SEK200 per share.
The company detailed its position in a white paper.
According to Framtiden, the offer inadequately values Swedish Match’s leading position in the rapidly growing nicotine pouch segment and the latent market potential worldwide. Furthermore, the investors believe the offer underappreciates the uniqueness of a fast-growing established global consumer staples business and forces the realization of capital gains that would otherwise be deferred for long-term investors who want to participate in the company’s continued growth.
“My partner Chris Anderson and I believe that this deal does not make sense for long-term shareholders,” said Dan Juran, managing member of the Framtiden Partnerships, in a statement. “I have closely followed Swedish Match’s development for nearly two decades, built relationships with its managers and currently serve as the chairman of the company’s nominating committee. I was dismayed to see the board recommend the sale of this Swedish jewel at a bargain price in the early stage of probably the greatest chapter in its long history.
Juran said that while investors may be tempted by the short-term premium, especially during a period of market declines, he compared the potential of Swedish Match to that of Coca-Cola in the 1980s and Philip Morris in the 1950s.
“Those companies compounded earnings at a superior rate for many years, and shareholders who stuck with them were rewarded mightily,” he said. “We believe sticking with Swedish Match is likely to prove far more remunerative to shareholders over time than cashing out. We hope other shareholders see the merits of our position, further detailed in our white paper.”
Framtiden Management Co. joins Elliott Management Corp. and Bronte Capital in asserting that PMI’s offer undervalues Swedish Match. Elliott Management Corp. is believed to be increasing its stake in Swedish Match in order to get a better price from PMI.
PMI says it has already obtained approvals for its acquisition by regulators in Brazil and the United States. European regulators have indicated that they intend to review the bid by Oct. 11.
September 21, 2022
EU to Decide on Swedish Match Deal by Oct. 11

Photo: Berk
European Antitrust regulators will review Philip Morris International’s $16 million bid for Swedish Match by Oct. 11, reports Reuters, citing a Sept. 6 European Commission filing.
At the end of its scrutiny, the EU competition enforcer can clear the deal with or without remedies or it can open a four-month-long investigation if it has serious concerns.
In August, PMI extended the acceptance period for its offer from Sept. 10 to Oct. 21 following indications that the European regulators needed more time to review the proposed takeover.
The multinational says it has already obtained approvals from other prominent regulators, including those in the United States and Brazil.
September 8, 2022
PMI Mulls Lowering Threshold for SM Bid

Photo: Swedish Match
Philip Morris International is considering lowering the acceptance threshold on its $16 billion takeover bid for Swedish Match, reports Bloomberg, citing people with knowledge of the matter.
The multinational is reportedly contemplating the move as it seeks ways to increase the likelihood the acquisition will go through amid opposition from shareholders, including Elliott Investment Management.
Elliott has secured a 5.25 percent stake in Swedish Match. The activist investor has a history of building stakes in European targets to block full takeovers and secure a higher price.
PMI’s bid was originally conditional on it getting more than a 90 percent stake in Swedish Match, a level that would normally allow it to squeeze out any remaining dissenters and take the company private. The idea of lowering the acceptance threshold raises the prospect that Philip Morris could end up with a majority stake in Swedish Match and keep it publicly traded, at least temporarily.
Last month, Philip Morris extended the acceptance period for the offer to Oct. 21 after regulators in Europe indicated they needed more time to review the bid.
September 6, 2022
Deloitte Fined for Audit of Malawi Leaf Company
The Institute of Chartered Accountants in Malawi (ICAM) has fined Deloitte Malawi after finding the auditing firm guilty in cases involving its audits of Malawi Leaf Company.
ICAM conducted investigations through the Ethics and Investigations Committee and convened disciplinary hearings through the Disciplinary Committee on cases of its members, according to Malawi24.
In one case, ICAM says Deloitte did not give due diligence to the procedures in auditing Malawi Leaf Company (MLC) , a subsidiary of Auction Holdings Limited. Deloitte assured that AHL Group had complied with the applicable International Financial Reporting Standards.
The company was found guilty for this and the ICAM council has imposed on Deloitte a maximum penalty of a severe reprimand and a fine of 1.5 million Kwacha.
Between 2014 and 2016, ICAM says Deloitte did not give due diligence to the procedures in auditing and assured financial statements for the years in question that had errors and misstatements because they included fictitious sales made to Eastern Tobacco Company for $1.2 million.
The company was found guilty for this and the council has imposed on Deloitte a maximum penalty of severe reprimand and a fine of 1.5 million Kwacha.
However, Deloitte was found not guilty on a third charge related to overvaluing stocks in financial statements for 2014, 2015 and 2016.
July 21, 2022
Juul Labs Exploring Options, Including Financing

Juul Labs on Friday said it is in the early stages of exploring several options including financing alternatives, as the company deals with lawsuits and a potential ban on sales of its e-cigarettes by U.S. health regulators.
Bloomberg News earlier reported, citing sources, that Juul’s bankers at Centerview Partners are sounding out investors for a possible $400 million first-lien term loan due August 2023.
The proceeds would help refinance an existing term loan, which has around $394 million outstanding and matures on the same date, the report added.
A spokesperson for Juul told Reuters that the company is looking at options to protect its business and to address the “impact of the FDA’s now stayed order so we can continue offering our products to adult consumers who have or are looking to transition away from traditional cigarettes.”
Bloomberg News in its report said Juul was also considering a new $150 million second-lien term loan, which may have an August 2024 maturity, to help pay down some of the first-lien term loan and to increase liquidity, the report said.
Financing proposals for either loan are due July 21, according to the report.
Last month, the Food and Drug Administration (FDA) blocked sales of Juul e-cigarettes and said the applications “lacked sufficient evidence” to show that sale of the products would be appropriate for public health.
However, Juul appealed the agency’s order and earlier this month FDA put on hold its ban saying it would do an additional review of the company’s marketing application.
July 16, 2022