Malboro maker Philip Morris International finally wins support for its $15.7bn takeover of Swedish Match, despite securing slightly less than 90 per cent of backing.
PMI said said it nabbed 82.59 per cent of the Swedish company, short of the 90 per cent level at which it can start a compulsory purchase of remaining shares.
However, the US company said it had received Swedish Match’s 10 largest shareholders had accepted its bid, meaning that activist investor Elliott Management had likely tendered its shares.
“Our intention is still to take the company entirely private, so it is better for the (Swedish Match) shareholders if they tender their shares,” PMI Chief Executive Jacek Olczak told Reuters.
The Malboro maker last month raised its offer for the nicotine pouch maker to 116 kronor ($10.34) per share from 106 kronor, hoping to finalise the takeover and appease hedge funds who have been craving a higher bid.
PMI chief exec Jacek Olczak said the bid was its “best and final” offer, which would benefit both sides.
Philip Morris also agreed to pay tobacco group Altria around $2.7bn for the US commercialisation rights for e-cigarette brand IQOS.
It is understood that the firm plans to utilise Swedish Match’s retail distribution channels to push these new products in the US.
However, the news that the deal has finally gone through could spell danger to PMI’s biggest rivals, including British American Tobacco, which has been pushing forward with its own cigarette alternatives.
Chief marketing officer Kingsley Wheaton told City A.M. said the firm was slowly but surely growing the new product range in markets like South Africa, Kenya and Pakistan, and was “trying to find the right opportunities in developing markets”.
He said that whilst it was “certainly true” that the northern hemisphere have a “more advanced approach” to ‘new category’ products like vapes and heated tobacco, he said this was simply driven by consumer demands and cigarette pricing.