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Philip Morris ends Sweden match after sucking up protests from Reuters



© Reuters. FILE PHOTO: Cans of moist powdered tobacco “snus” are seen on shelves at a Match Sweden store in Stockholm, Sweden October 24, 2018. REUTERS/Anna Ringstrom

By Marie Mannes

(Reuters) – Marlboro maker Philip Morris International (NYSE 🙂 (PMI) overcame some objections to win an 83% stake in Swedish Match, less than the 90% it wanted but enough to convince they followed up with a $16 billion deal that would cut tobacco exposure.

PMI previously said it could bid if it didn’t reach the 90% threshold at which it could initiate a mandatory purchase of the remaining shares.

The US group said on Monday that it believes that level can eventually be reached, and that the 10 largest shareholders of Match Sweden have accepted its bid.

That means activist investor Elliott Management, which built a 10.5% stake in Match Sweden and opposed PMI’s offer, has auctioned its shares. Elliott declined to comment.

“Our intention remains to take the company completely private, so it would be better for shareholders (Swedish Match) if they bid for their shares,” PMI CEO Jacek Olczak said. with Reuters.

PMI said it has extended its offer, now unconditionally, until November 25 in the hope of raising more shares, and Olczak says that could cause some index funds not to bid on shares of the company yet. they do so, in addition to other holdings

PMI made an offer of 106 crowns/share to buy Match Sweden in May, and then raised it to 116 crowns/share in October after some investors deemed the initial price too much short.

Buying Match Sweden, with its popular wet snuff “snus” products and nicotine-free “ZYN” pouches, will support PMI in its stated ambitions to move away from unhealthy cigarettes and ultimately become a smoke-free company.

The deal will also help pave the way for PMI to enter the US market, where Match Sweden has grown its business rapidly and where PMI is currently absent.

“I see strong industry logic in the mix and see that Match Sweden can do things with PMI in both cases,” said the Managing Director of Match Sweden, Lars Dahlgren. Match Sweden executive Lars Dahlgren said, referring to whether the company will be delisted or remain listed with PMI as the main shareholder.

When asked about his future with the company, Dahlgren, who has served as the company’s CEO since 2008, said it remains to be seen as no formal agreement has been struck, but added that he “enjoyed working at the Sweden match”.

In order to secure Elliott’s approval, PMI could promise investors a special dividend or a seat on its board to investors, Jefferies analysts said in a note to clients. .

According to Reuters calculations, Elliott could make a profit of more than $100 million, or more than 6.4% return on his investment.

PMI and Elliott declined to comment.

John Hempton, co-founder of Sydney-based Bronte Capital, also opposed the deal, but said Sunday that he would bid on his shares if Elliott did the same.

IMAGE: Philip Morris takeover bid brightens up shares of Match Sweden (https://fingfx.thomsonreuters.com/gfx/mkt/zdpxdyemxpx/swedish.PNG)

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