Tag: Swedish Match

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
Sales up at Swedish Match

Photo: Swedish Match
Sales of Swedish Match increased by 21 percent to SEK5.78 billion ($525.77 million) for the third quarter of 2022. In local currencies, group sales increased by 5 percent. The group’s operating profit increased to SEK2.4 billion from SEK2.08 billion in the comparable 2021 quarter.
Operating profit from product segments increased by 15 percent to SEK2.4 billion. In local currencies, operating profit from product segments declined by 1 percent for the third quarter.
In local currencies, operating profit grew by 12 percent for the smoke-free product segment. For the cigars product segment, operating profit declined, impacted by lower volumes. The lights product segment faced particularly tough conditions and reported a steep decline in operating profit.
Lars Dahlgren
Profit after tax increased to SEK1.78 billion from SEK1.54 billion in the comparable 2021 quarter.
Swedish Match attributed its performance to continued momentum for the U.S. smoke-free business and the strong U.S. dollar.
“Our core smoke-free business, and especially our nicotine pouch businesses, continued to demonstrate strength and attractive prospects, both commercially and from a tobacco harm reduction perspective,” said Swedish Match CEO Lars Dahlgren in a statement. “While we experienced some challenges in the quarter, underlying developments in several of our businesses were stronger than what the reported financials portrayed.”
October 31, 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
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

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 Extends Swedish Match Bid Deadline

Photo: xtock
Philip Morris Holland Holdings (PMHH) has extended the acceptance deadline of its $16 billion offer for Swedish Match to Nov. 4, 2022, as it awaits merger control approval from the European Commission.
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.
The completion of the offer is conditional upon regulatory approvals. PMHH says it has already received the green light in the United States and Brazil but is still awaiting approval from the European Commission, which started its formal review on Sept. 6, 2022. PMHH decided to extend the deadline because it does not expect the Commission to complete its review until late October.
This is the second deadline extension. In early September, PMHH extended its initial Sept. 30 deadline to Oct. 11, based on its assessment of the European Commission’s progress with the review at the time.
According to PMHH, the other terms and conditions of its offer remain unchanged. “We believe our offer remains very compelling—particularly given the current market environment,” said Jacek Olczak, chief executive officer of Philip Morris International, in a statement. “We look forward to completing the transaction while also continuing to actively progress on our strategic alternatives to Swedish Match, should the offer ultimately prove unsuccessful.”
October 5, 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