- Philip Morris offered to acquire the Swedish Match company, focused on alternative products to cigarettes.
- The board of the Swedish company specializing in snuff and chewing tobacco supports the idea.
- The multinational knows that it must look for options as the sale of traditional cigarettes is declining.
Philip Morris International submitted a purchase offer for the Swedish Match company for 161.2 billion Swedish crowns, which is equivalent to about 16 billion dollars.
Swedish Match is a company that specializes in snuff and chewing tobacco products.
The American multinational, owner of mythical brands such as Marlboro, offered to pay 106 crowns in cash for each title of Swedish Match, which means a premium of almost 40 percent in relation to the value of those shares on Monday, May 9, before that the first versions of the operation emerged.
The board of directors of Swedish Match supports the acquisition proposal and has recommended the sale and it will now be the shareholders who must vote whether or not to accept the proposal by PMI.
For Philip Morris International, the purchase of Swedish Match, if carried out, would result in a combined company with a more-than-sustainable balance sheet and leverage of around three times net liabilities, with debt relief already stipulated for the following years.
Philip Morris International suspended this year the share buyback plan which launched in June 2021 and was to last three years.
The takeover proposal must now wait for it to accept 90 percent of the Swedish company’s outstanding shares.
Philip Morris buys the Zyn brand
The acquisition of Swedish Match would give Philip Morris, which is based in the United States but does not sell its products in the United States, access to well-oiled distribution networks in northern Europe.
Remember that PMI was spun off from Altria in 2008, a company that sells Marlboros in the United States.
The Swedish company gets most of its revenue from so-called “snus”, a type of tobacco for oral consumption that is very popular in Sweden.
Besides, The sale of its Zyn-branded tobacco-free nicotine pouches, which are best sellers in Scandinavia and the United States, is on the rise.
This Wednesday, May 11, Swedish Match reported its earnings for the first quarter of 2022 with a 30 percent growth in the sale of Zyn in the United States.
Total sales were slightly below forecasts.
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