Swedish Match accepts PMI’s $16 billion offer
According to The Wall Street Journal, Swedish Match’s board has accepted Philip Morris International’s offer of SEK 161.2 billion ($16.14 billion). The transaction is subject to shareholder approval. PMI hosted a live audio webcast today to discuss the pr
According to The Wall Street Journal, the board of Swedish Match has accepted an offer of 161.2 billion Swedish Krona (approximately $16.4 billion) from Philip Morris International (PMI). The deal is subject to shareholder approval.
PMI hosted a live audio webcast today to discuss the proposal. An archived copy of the webcast will be available at www.pmi.com/investors before 5 PM on June 9, 2022.
PMI CEO Jacek Olczak stated in a press release: “We are excited to announce this thrilling next step for Philip Morris International and Swedish Match towards a smoke-free future. Supported by compelling strategic and financial reasons, this combination will create a global smoke-free champion—strengthened by complementary geographic footprints, business capabilities, and product portfolios—and open important platforms for growth in the U.S. and internationally.”
“The dedicated employees and management of Swedish Match are firmly pursuing the company’s vision of a smoke-free world while achieving outstanding results. We look forward to building on this success and accelerating our shared smoke-free mission together.”
In 2016, PMI announced its new mission to replace cigarettes with scientifically-based, reduced-risk alternatives as quickly as possible, and the company has reported significant progress towards this goal. While in 2015, nearly all of PMI’s net revenue came from cigarettes, last year nearly 30% of its revenue came from smoke-free products. By 2025, PMI aims to become a predominantly smoke-free company, with more than half of its net revenue coming from such products. PMI has stated that it has established world-class scientific assessment capabilities, particularly in the areas of preclinical systematic toxicology, clinical and behavioral research, and post-market studies.
Swedish Match began its smoke-free journey 20 years ago, starting with the decision to divest its cigarette business. PMI has expressed appreciation for how Swedish Match has relentlessly pursued harm reduction through its smoke-free product portfolio; obtained authorization for its products through stringent regulatory pathways in the U.S.; and reshaped the public health landscape in countries like Sweden and Norway.
“As PMI continues to develop its business over the long term, it believes that these two companies will be a perfect match in terms of strategic vision, culture, and corporate ethos,” PMI wrote in a press release. “The two companies will be able to jointly create a science-led global smoke-free champion, combining expertise in heated tobacco and oral nicotine—including multiple MRTP [Modified Risk Tobacco Product] authorizations—and PMI’s emerging business in the e-cigarette space—vaping products—to transition more adult smokers to better alternatives than either company could achieve separately. Swedish Match will lead the oral nicotine business of the combined company.”
Financial analysts confirm that the deal has strategic value, as Swedish Match has entered the lucrative U.S. market. Due to health hazards and the stigma associated with smoking, cigarette sales have shown little sign of decline over the years. Meanwhile, “modern oral” products, such as nicotine pouches and lozenges, are driving growth in the oral tobacco category, which includes traditional chewing tobacco and moist snuff. Swedish Match’s Zyn pouches led the U.S. modern oral category with a 64% market share in sales in 2021.
According to PMI, the merger will immediately enhance PMI’s already strong growth trajectory and support more opportunities in the U.S. and internationally over time. Excluding transaction-related costs and the amortization of acquired intangible assets, it is also expected to increase adjusted diluted earnings per share before any synergies. Swedish Match’s operating cash flow includes meaningful net income in dollars, thereby improving PMI’s cash position.
According to the company’s interim report, from January 2022 to March 2022, sales and operating profit in Swedish Match’s product segment increased due to the continued strong momentum of the U.S. smoke-free business.
Group sales increased by 10% to 4.89 billion Swedish Krona (approximately $492.05 million). In local currency, sales increased by 2% in the first quarter.
Operating profit in the product segment rose to 2.12 billion Swedish Krona. In local currency, operating profit in the product segment decreased by 7% in the first quarter.
Net profit after tax was 1.49 billion Swedish Krona.
PMI has stated that it intends to retain and develop Swedish Match’s business presence in Sweden, where most of its skill base is located, as well as the headquarters of Swedish Match’s U.S. division in Richmond, Virginia. PMI has no plans to divest Swedish Match’s Lights business.
PMI hosted a live audio webcast today to discuss the proposal. An archived copy of the webcast will be available at www.pmi.com/investors before 5 PM on June 9, 2022.
PMI CEO Jacek Olczak stated in a press release: “We are excited to announce this thrilling next step for Philip Morris International and Swedish Match towards a smoke-free future. Supported by compelling strategic and financial reasons, this combination will create a global smoke-free champion—strengthened by complementary geographic footprints, business capabilities, and product portfolios—and open important platforms for growth in the U.S. and internationally.”
“The dedicated employees and management of Swedish Match are firmly pursuing the company’s vision of a smoke-free world while achieving outstanding results. We look forward to building on this success and accelerating our shared smoke-free mission together.”
In 2016, PMI announced its new mission to replace cigarettes with scientifically-based, reduced-risk alternatives as quickly as possible, and the company has reported significant progress towards this goal. While in 2015, nearly all of PMI’s net revenue came from cigarettes, last year nearly 30% of its revenue came from smoke-free products. By 2025, PMI aims to become a predominantly smoke-free company, with more than half of its net revenue coming from such products. PMI has stated that it has established world-class scientific assessment capabilities, particularly in the areas of preclinical systematic toxicology, clinical and behavioral research, and post-market studies.
Swedish Match began its smoke-free journey 20 years ago, starting with the decision to divest its cigarette business. PMI has expressed appreciation for how Swedish Match has relentlessly pursued harm reduction through its smoke-free product portfolio; obtained authorization for its products through stringent regulatory pathways in the U.S.; and reshaped the public health landscape in countries like Sweden and Norway.
“As PMI continues to develop its business over the long term, it believes that these two companies will be a perfect match in terms of strategic vision, culture, and corporate ethos,” PMI wrote in a press release. “The two companies will be able to jointly create a science-led global smoke-free champion, combining expertise in heated tobacco and oral nicotine—including multiple MRTP [Modified Risk Tobacco Product] authorizations—and PMI’s emerging business in the e-cigarette space—vaping products—to transition more adult smokers to better alternatives than either company could achieve separately. Swedish Match will lead the oral nicotine business of the combined company.”
Financial analysts confirm that the deal has strategic value, as Swedish Match has entered the lucrative U.S. market. Due to health hazards and the stigma associated with smoking, cigarette sales have shown little sign of decline over the years. Meanwhile, “modern oral” products, such as nicotine pouches and lozenges, are driving growth in the oral tobacco category, which includes traditional chewing tobacco and moist snuff. Swedish Match’s Zyn pouches led the U.S. modern oral category with a 64% market share in sales in 2021.
According to PMI, the merger will immediately enhance PMI’s already strong growth trajectory and support more opportunities in the U.S. and internationally over time. Excluding transaction-related costs and the amortization of acquired intangible assets, it is also expected to increase adjusted diluted earnings per share before any synergies. Swedish Match’s operating cash flow includes meaningful net income in dollars, thereby improving PMI’s cash position.
According to the company’s interim report, from January 2022 to March 2022, sales and operating profit in Swedish Match’s product segment increased due to the continued strong momentum of the U.S. smoke-free business.
Group sales increased by 10% to 4.89 billion Swedish Krona (approximately $492.05 million). In local currency, sales increased by 2% in the first quarter.
Operating profit in the product segment rose to 2.12 billion Swedish Krona. In local currency, operating profit in the product segment decreased by 7% in the first quarter.
Net profit after tax was 1.49 billion Swedish Krona.
PMI has stated that it intends to retain and develop Swedish Match’s business presence in Sweden, where most of its skill base is located, as well as the headquarters of Swedish Match’s U.S. division in Richmond, Virginia. PMI has no plans to divest Swedish Match’s Lights business.
