Philip Morris clinches Swedish Match after smoking out opposition By Reuters

By Marie Mannes

(Reuters) – Marlboro maker Philip Morris Worldwide (NYSE:) (PMI) overcame some opposition to clinch 83% of Swedish Match, wanting the 90% it needed however sufficient to persuade it to press on with a $16 billion deal that can reduce its publicity to cigarettes.

PMI had beforehand stated it might drop its bid if it didn’t attain the 90% threshold at which it could actually begin a obligatory buy of remaining shares.

The U.S. group stated on Monday it believed that stage might in the end be achieved, and that Swedish Match’s 10 largest shareholders had accepted its bid.

That may imply activist investor Elliott Administration, which had constructed a ten.5% stake in Swedish Match and opposed PMI’s supply, had tendered its shares. Elliott declined to remark.

“Our intention remains to be to take the corporate solely non-public, so it’s higher for the (Swedish Match) shareholders in the event that they tender their shares,” PMI Chief Govt Jacek Olczak informed Reuters.

PMI stated it had prolonged its supply, now unconditional, till Nov. 25 within the hope of additional elevating its stake, and Olczak stated that might lead some index funds that haven’t already tendered their shares to take action, along with different holdouts

PMI made a 106 crowns per share supply to purchase Swedish Match in Could, after which raised it to 116 crowns per share in October after some traders stated the preliminary value was too low.

Shopping for Swedish Match, with its common moist snuff “snus” merchandise and tobacco-free nicotine “ZYN” pouches, will support PMI in its acknowledged ambition to maneuver away from health-harming cigarettes and ultimately develop into a smoke-free firm.

The deal may even assist pave the way in which for PMI into the U.S. market, the place Swedish Match has grown its enterprise quickly and the place PMI is at present absent.

“I see sturdy industrial logic within the mixture and see Swedish Match with the ability to do issues with PMI in each eventualities,” Swedish Match CEO Lars Dahlgren stated, referring as to whether the corporate is delisted or stays listed with PMI as its majority shareholder.

Requested about his future with the corporate, Dahlgren, who has been its CEO since 2008, stated it remained to be seen since there was no formal settlement in place, however added he “loved working at Swedish Match”.

Jefferies analysts stated in a notice to purchasers that to safe Elliott’s approval, PMI might have probably promised a particular dividend or a seat on its board to the investor.

In keeping with Reuters calculations, Elliott stands to make a revenue of over $100 million, or greater than a 6.4% return, on its funding.

PMI and Elliott declined to remark.

John Hempton, co-founder of Sydney-based Bronte Capital, has additionally been in opposition to the deal, however stated on Sunday he would tender his shares if Elliott had performed the identical.

GRAPHIC: Philip Morris takeover bid lights up Swedish Match shares (https://fingfx.thomsonreuters.com/gfx/mkt/zdpxdyemxpx/swedish.PNG)