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Philip Morris Worldwide has struck a $16bn deal to purchase Swedish Match, because the tobacco firm makes its greatest guess but on alternate options to cigarettes.
Swedish Match is a pacesetter in so-called snus, or oral nicotine pouches, that originated in its home market however have grown more and more well-liked exterior Scandinavian nations.
The Stockholm-based firm owns Zyn, the most important nicotine pouch model within the US, growing the attraction of the deal for PMI, which has lacked a major presence in America for greater than a decade. Gross sales of Swedish Match’s snus grew greater than 50 per cent final yr within the US and Scandinavia.
Beneath the phrases of the deal introduced on Wednesday, PMI mentioned it might pay SKr106 ($10.57) per share for Swedish Match, a premium of 39 per cent to the closing share worth on Might 9, earlier than talks between the businesses grew to become public.
The board of Swedish Match, which has web debt of about $1.3bn, has beneficial its shareholders settle for the provide.
“If you happen to take a look at the explanation why PMI could be shopping for Swedish Match, it’d be for that US push alternative,” mentioned Jonathan Fell, a companion at funding home Ash Park Capital, which owns PMI shares.
Greatest recognized for promoting Marlboro exterior the US, PMI has been probably the most aggressive amongst conventional cigarette firms in its bid to realize market share in so-called new-generation merchandise, together with vapes and heated tobacco units.
Its push to reinvent itself and “unsmoke the world” has proved controversial, with a £1bn deal to purchase Vectura, a UK-based developer of bronchial asthma inhalers, prompting fierce criticism.
PMI traces its roots to 2008 when US-based Altria determined to spin off its worldwide enterprise. Its largest smoke-free product is the heated tobacco gadget IQOS, which was beforehand distributed within the US by Altria.
Swedish Match and PMI have collaborated earlier than, together with a shortlived 2009 enterprise designed to “commercialise Swedish snus and different smoke-free tobacco merchandise worldwide”.
PMI on Wednesday didn’t element any price financial savings from the deal however mentioned that its plans “don’t embrace any materials modifications with regard to Swedish Match’s operational websites, or its administration and staff, together with their phrases of employment.”
Jacek Olczak, chief govt of PMI, mentioned that the acquisition would “open up important platforms for development within the US and internationally.”
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