Tag: Philip Morris International

Reynolds Requests Retrial of Vuse IP Case

Image: inimalGraphic
R.J. Reynolds Vapor Co. has asked for a new trial after a U.S. District Court awarded rival Altria Client Services $95.23 million in damages related to an e-cigarette intellectual property dispute, reports the Winston-Salem Journal.
In early September, a federal jury determined that Reynolds Vapor’s Vuse Alto product infringes on three Altria patents.
In its retrial request, Reynolds Vapor stated that “Altria’s improper injection of inflammatory evidence regarding patent infringement allegations against Reynolds in other cases denied Reynolds a fair trial. Erroneous evidentiary rulings also prejudiced Reynolds’ ability to present its defense. Those errors independently, and under the cumulative error doctrine, affected the verdict such that a complete new trial is required.”
Altria said in a statement that “this was a fair trial. There is no basis for another trial, and we are pleased that the jury correctly found that Reynolds Vapor has infringed a number of our patents.”
The complaint concerns three patents awarded to Altria Client Services by the U.S. Patent and Trademark Office based on filings in April 2015.
Altria alleged Reynolds Vapor violated Altria’s patents covering the pod assembly used in Vuse Alto.
Reynolds believes the lawsuit was filed in retaliation for patent infringement complaints filed by Reynolds in April 2020 for infringement by Philip Morris International’s IQOS tobacco-heating device of six Reynolds patents.
Until recently, Altria was the exclusive U.S. distributor for IQOS in the United States.
On Sept. 29, 2021, the U.S. International Trade Commission upheld an initial determination from May 2021 that Philip Morris International’s IQOS device infringes on two patents owned by Reynolds. The ruling barred Altria Group from importing IQOS products into the U.S.
November 6, 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
Acceptance Period for Swedish Match Offer Expires Today

Photo: Swedish Match
Shareholders of Swedish Match must decide today whether to tender their shares to Philip Morris International.
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.
Under Swedish law, PMI needs 90 percent of shareholders to agree to the deal in order to get full control over the company.
Earlier this week, Framtiden Partnerships said it would not accept PMI’s sweetened offer, according to Reuters.
The investor, which owns nearly 1 percent of the Swedish nicotine products manufacturer, believes Swedish Match is better off as an independent company. Framtiden managing member Dan Juran estimates Swedish Match to be worth close to SEK200 per share.
Framtiden said it would urge Swedish Match management to initiate a share buyback and potentially a special dividend if the deal does not go through.
“As we wrote in our white paper, there is incredible long-term value in this asset, but we also think that there is great value to be realized in the short term as well,” Chris Anderson, a partner in Framtiden, was quoted as saying by Reuters, adding that a planned U.S. cigar business spinoff will also provide additional shareholder value.
On Oct. 28, Elliott Management Corp. raised its stake in Swedish Match to over 10 percent—enough to scupper the deal if it opposed the bid.
November 4, 2022
Medicago Cuts Jobs at Covid Vaccine Facility

Photo: Miljan Živković
Medicago is cutting 62 jobs at its manufacturing facility in Durham, North Carolina, USA, which played a key role in producing the company’s tobacco plant-based Covid-19 vaccine, reports the Triangle Business Journal.
In a notice to the North Carolina Department of Commerce, the Canadian biopharmaceutical company said the layoffs are the result of Medicago “restructuring its workforce to align with its changing business needs.”
Using tobacco plants, the company developed a Covid vaccine called Covifenz, which Canadian regulators approved earlier this year. The country’s government committed to purchasing 20 million doses of the vaccine with an option to purchase 56 million more.
No other country has approved Covifenz, however. The World Health Organization, meanwhile, has been reluctant to grant the vaccine emergency approval due to Medicago’s ties with Philip Morris International, which owns about a third of the biopharmaceutical company.
Headquartered in Quebec City, Medicago employs 600 people.
The company built out its facility in Durham through a 2010 partnership with the U.S. Defense Advanced Research Projects Agency, which included $21 million in funding from the federal agency. The facility features greenhouse space and an automated extraction and purification system.
November 1, 2022
Philip Morris Expands Operations in Lithuania

Photo: krivinis
Philip Morris International is expanding the production capacity of its factory in Klaipeda, Lithuania, following the suspension of its operations in Ukraine, reports Interfax, citing a company statement.
The multinational will reportedly construct a new production building connected to its existing storage facilities.
The Klaipeda factory will manufacture products intended for Ukraine, the company said. The project will cost €3.5 million and is expected to be completed toward the end of 2023.
On Feb. 25, PMI announced the suspension of its activities in Ukraine, including at its factory in Kharkov, due to Russia’s military invasion.
Ukraine accounted for around 2 percent of the multinational’s cigarette and heated-tobacco shipments in 2021 and less than 2 percent of PMI’s total revenue, according to the company.
November 1, 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
Altria and JT to Sell Heated Products in U.S.

Photo: ASDF
The JT Group and Altria Group, through their Japan Tobacco International and Philip Morris USA subsidiaries, have established a joint venture to market and commercialize heated-tobacco sticks (HTS) products in the U.S. with Ploom-branded devices and Marlboro-branded consumables.
The two groups also signed a long-term, nonbinding global memorandum of understanding (MOU) to explore commercial opportunities for a wide range of potentially reduced-risk products (RRP).
“As part of our strategic focus on HTS, we’re very enthusiastic to launch our Ploom brand in the U.S., the world’s largest RRP market in value, through our partnership with the market leader, Altria,” said Masamichi Terabatake, president and CEO of the JT Group’s tobacco business, in a statement.
“We also look forward to entering into a long-term strategic collaboration with Altria to further explore global commercial opportunities in the RRP category. I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”
“We are excited to begin a new partnership with JT Group, a leading international tobacco company,” said Altria CEO Billy Gifford in a statement. “We believe this relationship can accelerate harm reduction for adult smokers across the globe.”
“We believe moving beyond smoking in the U.S. requires multiple FDA-authorized products within each smoke-free category to appeal to a diverse range of adult smokers. We believe that our joint venture and pipeline of heated-tobacco products position us well to increase adoption of smoke-free products.”
The joint venture establishes a new company, Horizon Innovations, for the U.S. commercialization of current and future HTS products owned and developed by either party. Horizon will commercialize HTS products in the U.S. under the Ploom and Marlboro trademarks.
JTI will have a 25 percent economic interest in Horizon to reflect its HTS product contribution. PM USA will have a 75 percent economic interest, reflecting the company’s strong distribution network and infrastructure, as well as its initial capital contribution of $150 million to Horizon.
Subsequent capital contributions made to Horizon will be split according to the parties’ respective economic interest. JTI and PM USA will both maintain independent ownership of their respective intellectual properties, including any IP acquired after the formation of the joint venture that supports the development of future HTS products.

“I strongly believe that this cooperation will increase the global harm reduction possibilities for adult consumers and drive incremental value for the JT Group and Altria.”
Masamichi Terabatake, president and CEO, JT Group’s tobacco business
As part of the joint venture, JTI and PM USA will combine their scientific and regulatory expertise to jointly prepare U.S. Food and Drug Administration filings, including a premarket tobacco product application (PMTA) for the latest version of Ploom HTS products. The parties currently expect to submit the PMTA for these products in the first half of 2025. Upon PMTA authorization, JTI will supply HTS devices and PM USA will manufacture HTS consumables for Horizon. In addition, JTI and PM USA have agreed to commercialization milestones for Horizon, which include distribution requirements and minimum levels of cumulative marketing investments.
“By forming this JV [joint venture], we are bringing together the marketing, innovation, R&D and science capabilities that JTI has developed over the years with Altria’s science, U.S. regulatory experience and vast infrastructure to create a very strong proposition for the U.S. adult smoker,” said JTI CEO Eddy Pirard.
Separate to the JV, the JT Group and Altria also announced the mutual signing of a nonbinding MOU. Under this MOU, the parties aim to structure a strategic partnership over time to market and commercialize a wide range of potentially reduced-risk products and strengthen their shared development capabilities and geographic reach. The companies believe this collaboration will accelerate global tobacco harm reduction solutions and bring significant value to their respective businesses.
Altria’s pipeline of heated-tobacco products includes tobacco-heating product formats and new-to-market technologies. “We believe HTC products can appeal to U.S. adult smokers who are open to novel smoke-free products but have not yet found a satisfying alternative to cigarettes,” the company wrote. “This audience includes the millions of U.S. adult smokers who tried, but ultimately rejected, e-vapor products.”
Altria expects to finalize the design of its HTC platform 1 technology (HTC1) by the end of this year and then begin regulatory preparations for a PMTA submission by the end of 2024.
The company also expects to partner with JT to launch the HTC1 technology in an international test market in late 2024 or early 2025 using JT’s sales and distribution network.
Prior to the recent agreement with the JT Group, Altria terminated its noncompete agreement with Juul Labs and sold its exclusive U.S. commercialization rights for the IQOS tobacco-heating system to Philip Morris International for about $2.9 billion.
October 28, 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
EU Commission OKs Swedish Match Deal

Photo: Destina
The European Commission has approved the proposed acquisition of Swedish Match by Philip Morris International.
In a statement on its website, the Commission noted that Swedish Match holds a de facto monopoly on distribution of tobacco and nicotine products in Sweden through its subsidiary SMD Logistics.
The Commission’s preliminary investigation showed that SMD Logistics has a dominant position in the supply of combustible tobacco, smoke-free and related products in Sweden.
The Commission found that the transaction could have led to foreclosure effects in Sweden, given that SMD is the only distributor of combustible tobacco, smoke-free and related products in Sweden. It did not find competition concerns in other markets in which the parties compete, including the manufacture and supply of snus in Sweden and Norway and of nicotine pouches in Sweden and Slovenia, as sufficient alternative suppliers would remain active following the transaction.
To address the Commission’s preliminary competition concerns, PMI offered to divest Swedish Match’s logistics arm, SMD Logistics.
The commitments consist of the structural divestiture of a stand-alone business, which fully removes the vertical links between the manufacture of tobacco and nicotine products and their distribution in Sweden. This will enable a purchaser to run the divested business as a viable competitive force in the market on a lasting basis.
The Commission said it will closely monitor the divestment process, including the choice of a suitable purchaser for the divested business that will have to be approved by the Commission.
Following the market test, the Commission concluded that the transaction, as modified by the commitments, would no longer raise competition concerns.
Earlier, PMI’s proposed acquisition received a green light from authorities in the United States and Brazil.
“We are pleased to have received all necessary regulatory approvals and 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 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.”
October 26, 2022
PMI Sweetens SM Bid

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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