Philip Morris International Ups Its Bid for Swedish Match

The tobacco company make its "best and final offer," according to CEO Jacek Olczak.
Logos for Philip Morris International and Swedish Match

NEW YORK — Philip Morris International (PMI) has made its final offer to acquire Swedish Match, and the company is hoping to close a deal in the fourth quarter of this year.

"We believe the best and final price in our revised offer for Swedish Match, announced earlier today, provides very compelling value for both sets of shareholders. Should the offer fail, we are well prepared to proceed autonomously to develop IQOS and the rest of our smoke-free portfolio in the U.S.," said Jacek Olczak, CEO of PMI, during the company's third quarter earnings call on Oct. 20. 

His statement came as Philip Morris Holland Holdings BV (PMHH), an affiliate of PMI, announced it increased its recommended public offer to the shareholders of Swedish Match AB to SEK 116 (roughly $10.34) in cash per share. This is compared to SEK 106 (roughly $9.44) in cash per share previously offered.

The revised price represents a premium of 52.5 percent compared to the undisturbed Swedish Match closing share price of SEK 76.06 (roughly $6.75) on May 9, 2022, according to PMI, which added PMHH will not increase the offer price again.

The latest offer is valued at approximately $15.8 billion compared to the nearly $16 billion of the initial offer five months ago. The size of the deal has fallen significantly in U.S dollar terms since the initial offer due to the weakening of the Swedish Krona against the dollar, according to Seeking Alpha.

The price in the revised offer primarily reflects the higher net value to PMI related to the portion of Swedish Match's cash flows generated in U.S. dollars, given currency movements since the initial offer was announced in May, the company explained.

PMI believes that the deterioration in the global economic outlook, equity markets and the interest rate environment since the time of the initial offer further strengthens the attractiveness of the revised offer to Swedish Match shareholders.

If Swedish Match does not accept the offer, PMI said it will continue with its strategic alternatives to the Swedish Match combination, including its plans for the U.S. commercialization of IQOS  as well as its broader smoke-free portfolio.

In a deal reached with Altria Group Inc., PMI is paying Altria approximately $2.7 billion in exchange for the exclusive U.S. commercialization rights to the IQOS system effective April 30, 2024, as Convenience Store News reported on Oct. 20.