PMI Mulls Offer for Swedish Match

Source from:  Tobacco reporter 05/19/2022

Philip Morris International and Swedish Match confirmed that they are talking about a possible offer by PMI for Swedish Match.

“The discussions are in progress, and it is uncertain whether an offer will be made,” PMI wrote in a statement. “PMI intends to make no further comment regarding the discussions unless and until it is appropriate to do so.”

“There can be no certainty that an offer will be made,” Swedish Match wrote in a press note.

The statements were made in response to market speculation, first reported in The Wall Street Journal, about a possible deal.

Swedish Match has a market capitalization of SKR120.92 billion ($11.99 billion), and Philip Morris is valued at about $154 billion.

Financial analysts said a deal has strategic merit for PMI given the attractive U.S. market. The U.S. is the world’s most lucrative nicotine market, with strong and highly predictable cash flows.

Morgan Stanley said that purchasing Swedish Match could accelerate PMI’s smoke-free transition. “Swedish Match is one of the few larger scale tobacco assets with a meaningful smoke-free business and attractive growth profile,” the investment bank wrote in a note to investors. Morgan Stanley believes Swedish Match could increase PMI’s smoke-free revenue from 29 percent in 2021 to 44 percent by 2025.

PMI aims to generate about 50 percent of its revenue from smoke-free product by 2025.