Nov 7 (Reuters) – Marlboro maker Philip Morris International (PMI) (PM.N) overcame some opposition to win 83% of Swedish Match (SWMA.ST), short of the 90% it wanted but enough to convince him to go ahead with a $16 billion deal that will reduce his exposure to cigarettes.
PMI previously said it could drop its bid if it doesn’t reach the 90% threshold at which it can initiate a mandatory purchase of the remaining shares.
The American group said on Monday that it believed that level could finally be reached and that the 10 main shareholders of Swedish Match had accepted its offer.
It would mean activist investor Elliott Management, which had built a 10.5% stake in Swedish Match and opposed PMI’s bid, had tendered its shares. Elliott declined to comment.
“Our intention is still to fully privatize the company, so it is better for (Swedish Match) shareholders that they tender their shares,” PMI chief executive Jacek Olczak told Reuters.
PMI said it extended its now unconditional offer until November 25 in hopes of further increasing its stake, and Olczak said that could lead to some index funds that have not yet tendered their shares to do so. , in addition to other recalcitrants.
PMI made an offer of 106 crowns per share to buy Swedish Match in May, then raised it to 116 crowns per share in October after some investors said the initial price was too low.
The purchase of Swedish Match, with its popular ‘snus’ wet snuff products and ‘ZYN’ tobacco-free nicotine pouches, will help PMI in its stated ambition to move away from harmful cigarettes and become term a smoke-free business.
The deal will also help pave the way for PMI in the US market, where Swedish Match has rapidly expanded its business and where PMI is currently absent.
“I see strong industry logic in the combination and I see Swedish Match being able to do things with PMI in both scenarios,” Swedish Match CEO Lars Dahlgren said, indicating whether the company is delisted or remains listed. with PMI as majority shareholder.
Asked about his future with the company, Dahlgren, who has been CEO since 2008, said that remained to be seen since there was no formal agreement in place, but added that he ” enjoyed working at Swedish Match”.
Jefferies analysts said in a note to clients that to gain Elliott’s approval, PMI could potentially have promised a special dividend or a seat on its board of directors to the investor.
According to Reuters calculations, Elliott is expected to make a profit of more than $100 million, or a return of more than 6.4%, on its investment.
PMI and Elliott declined to comment.
John Hempton, co-founder of Sydney-based Bronte Capital, also opposed the deal, but said on Sunday he would offer his shares if Elliott had done the same.
Reporting by Marie Mannes Editing by Terje Solsvik and Mark Potter
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