Tag: Elliott Management Corp.

Philip Morris Clinches Swedish Match

Photo: Swedish Match
Philip Morris International is moving forward with its $16 billion takeover of Swedish Match despite securing less than the 90 percent stake it sought, reports Reuters.
In a press note dated Nov. 7, PMI said it had secured 82.59 percent of the Swedish company, short of the 90 percent level at which it can start a compulsory purchase of the remaining shares.
This suggests that Elliott Management Corp., which had built a 10.5 percent stake in Swedish Match and opposed PMI’s offer, has tendered its shares.
PMI also announced it would further extend the acceptance period for remaining shareholders until Nov. 25, 2022, adding that the price in the offer for shares tendered during the further extended acceptance period will be reduced to SEK115.07 in cash per share.
“We are pleased that 82.59 percent of Swedish Match shareholders, including—we believe—the top 10 shareholders, have tendered their shares at the best and final price of SEK116 per share. This achievement of a high controlling stake should allow us to harness the strategic potential of the transaction, including anticipated revenue synergies,” said PMI CEO Jacek Olczak.

“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.”
Jacek Olczak, CEO, PMI
“We are today extending the acceptance period until Nov. 25 to allow those shareholders who have not tendered—including outstanding index funds—additional time to accept the offer while waiving the 90 percent acceptance condition to provide certainty to those shareholders who have already tendered. Our objective is to delist the shares of Swedish Match from the stock market after reaching an ownership of more than 90 percent. We, therefore, encourage the remaining retail and other institutional shareholders to tender in the extended time.
“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 will be working together to create value as we accelerate toward our shared vision of a smoke-free future.”
Mark Kelly, managing director of Cowen’s Event Driven Group, welcomed the acquisition.
“History will likely prove this as a successful transaction all around,” he said. “Swedish Match shareholders engineered a material improvement to the already healthy premium that Philip Morris had offered, and Philip Morris has now secured ownership of a world-class smokeless operation. Swedish Match will help PMI accelerate its goal of going 50 percent smokeless by 2025 and also brings it a U.S.-wide distribution network to facilitate its own rollout of IQOS heat-not-burn products going forward.”
November 7, 2022
PMI Wins Elliott Support for Swedish Match Bid

Photo: Swedish Match
Elliott Management Corp. has decided to back Philip Morris International’s bid for Swedish Match, reports the Financial Times.
By the Nov. 4 acceptance deadline, the multinational’s offer had received more than 80 percent shareholder acceptance.
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.
In October, PMI increased the price of its bid to SEK116 per share from the SEK106 per share offered in May. Swedish Match’s board of directors advised shareholders to accept PMI’s revised offer.
Earlier this week, Framtiden Partnerships said it would not accept PMI’s sweetened offer, according to Reuters.
In a white paper, the investor, which owns nearly 1 percent of the Swedish nicotine products manufacturer, explained it believes Swedish Match is better off as an independent company.
PMI’s bid has won approval from regulators in the EU, Brazil and the United States.
November 6, 2022
Elliot Raises Stake in Swedish Match Again

Photo: Swedish Match
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.
October 31, 2022
Board Supports PMI’s Revised Offer

Photo: Swedish Match
Swedish Match’s board of directors has advised shareholders to accept Philip Morris International’s revised offer for the 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.
The offer represents a premium of 52.5 percent compared to the closing share price of SEK76.06 on May 9, 2022 (the last day of trading prior to market speculation regarding a potential public offer for the company), a premium of 52.9 percent compared to the volume-weighted average trading price of SEK75.86 for the shares during the last 30 trading days ended on May 9, and a premium of 60.4 percent compared to the volume-weighted average trading price of SEK72.33 for the shares during the last 90 trading days ended on May 9.
The resolution to support PMI’s revised offer was supported by all Swedish Match board members except Pär-Ola Olausson, who believes that Swedish Match has the competence and the experience to remain independent in the long-term and that the terms of the revised offer do not reflect the long-term fundamental value of the company, according to a company statement.
The acceptance deadline for PMI’s offer is Nov. 4, 2022.
October 28, 2022
PMI Sweetens SM Bid

Photo: vetkit
Philip Morris Holland Holdings (PMH), an affiliate of Philip Morris International has increased the price of its bid for Swedish Match to SEK116 ($10.34) per share from the SEK106 per share offered in May. The company announced it would not further increase the price in its revised offer.
According to PMI, the new price offered represents a premium of 52.5 percent compared to Swedish Match’s closing share price of SEK76.06 on May 9, 2022; 52.9 percent compared to the volume-weighted average trading price of SEK75.86 during the 30 trading days ending May 9, 2022; and 60.4 percent compared to the volume-weighted average trading price of SEK72.33 during the 90 trading days ending May 9, 2022.
“We believe the best and final price in our revised offer for Swedish Match provides very compelling value for the shareholders of both Swedish Match and PMI,” said PMI CEO Jacek Olczak in a statement.
“The price in the revised offer primarily reflects the higher net value to PMI related to the portion of Swedish Match’s cash flows that are generated in U.S. dollars, given currency movements since the initial offer was announced in May.
“Moreover, 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 to Swedish Match’s shareholders. The revised offer retains a 90 percent acceptance condition, which is critical to capture the full potential of the combination. Should the offer fail, we are well prepared to proceed autonomously to develop IQOS and the rest of our smoke-free portfolio in the U.S.”

“The price in the revised offer primarily reflects the higher net value to PMI related to the portion of Swedish Match’s cash flows that are generated in U.S. dollars.”
Jacek Olczak, CEO, PMI
In May, PMI bid about $16 billion for Swedish Match, which is best known for its smokeless products, including the successful Zyn nicotine pouches that have been taking the U.S. market by storm. Swedish Match’s board of directors recommended shareholders accept the offer, but some investors, including Elliott Management Corp., object, saying the bid undervalues their firm.
Raising the offer is made easier for PMI by the gains of the U.S. dollar against the Swedish currency since the deal was struck. Other factors that went into the revised offer were inflation, volatility in equity markets and changes in interest rates, according to a source at The Wall Street Journal.
In related news, PMI has struck a deal with Altria to buy back the U.S. commercialization rights for IQOS, Philip Morris’ heated-tobacco device.
IQOS and the proposal to buy Swedish Match are part of PMI’s strategy to generate more than half of its annual net revenue from smoke-free products by 2025, up from about 30 percent currently.
October 20, 2022
PMI Won’t Drop Swedish Match Bid: Olczak

Jacek Olczak (Photo: PMI)
Philip Morris International has no intention to drop its bid for Swedish Match, CEO Jacek Olczak told Reuters. In fact, he believes the $16 billion offer is “even more attractive” now given that the global macro-economic environment has changed since the original bid.
In May, PMI offered to buy the Stockholm-based company to help accelerate its move to cigarette alternatives. Swedish Match is best known for its oral tobacco products, including snus and the Zyn tobacco-free nicotine pouches that have taken the U.S. market by storm.
By Swedish law, 90 percent of Swedish Match shareholders need to approve the offer before Oct. 21, but some have come out against the $16 billion offer, saying it undervalues the company.
One of the holdouts, Elliot Management Corp., recently increased its stake in Swedish Match to 7.25 percent from 5.5 percent. The activist investor is believed to be planning to oppose the deal under its current terms. Elliott’s increased stake means the offer will fail if another 2.75 percent of shareholders take a similar view.
Shareholder Framtiden Partnerships, which owns 1 percent of Swedish Match also believes PMI’s offer is too low.
Olczak indicated that if fewer than 90 percent of Swedish Match shareholders approve the bid, PMI could simply become a majority shareholder. He said he regularly met with investors of both companies but declined to comment on whether PMI would increase its offer.
The acceptance period for the offer was initially set to expire on Sept. 30, 2022, but was later extended to Oct. 21, 2022, as the bid awaits approval from the European Commission.
October 4, 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
Hedge Fund Might Force PMI to Raise its Swedish Match Bid

Photo: Swedish Match
A hedge fund might force Philip Morris International to raise its bid for Swedish Match, according to an article in The Wall Street Journal.
On May 11, PMI offered SEK161.2 billion ($16.14 billion) to purchase Swedish Match. The acceptance period for the offer was initially set to expire on Sept. 30, 2022, but was later extended to Oct. 21, 2022, as the bid awaits approval from the European Commission.
The offer is conditional on PMI gaining more than 90 percent of Swedish Match’s Stockholm-listed shares.
Since the companies announced their deal, Elliott Management Corp. has acquired an undisclosed stake in Swedish Match. According to Massimo Stabilini, a hedge-fund manager at London-based Sinclair Capital, Elliott is trying to get a better price from PMI.
Elliott would need to buy close to $1.6 billion worth of Swedish Match stock to stop Philip Morris reaching 90 percent, suggesting it might need others to join its campaign. Under Swedish rules, it will also have to disclose its holding if its stake reaches 5 percent.
Elliott is not the only Swedish Match shareholder seeking better terms. Earlier this year, shareholder Bronte Capital also opposed the takeover, saying the offer price was “unacceptable,” according to Reuters.
Investors holding out for a better price are betting that PMI will cough up rather than walk away from the deal. The acquisition is key to the cigarette giant’s stated goal of generating more than 50 percent of its net revenue from smoke-free products by 2025, up from 29 percent last year.
Elliott has proven willing to play a longer game before, according to The Wall Street Journal. In 2016, it took a more than 10 percent stake in Arcam after General Electric Co. agreed to buy the Swedish 3-D printing company. GE later raised its bid and lowered its minimum approval threshold to 75 percent.
August 19, 2022