Swedish Match Shares Jump on Speculation of Philip Morris Bid

Source from:  Bloomberg 10/19/2009

Swedish Match AB, Europe's largest maker of smokeless tobacco products, jumped in Stockholm trading on speculation Philip Morris International Inc. will bid for the company. The shares rose as much as 8.9 percent, the most in almost a year, and were up 9 kronor, or 6.2 percent, at 155 kronor as of 3:45 p.m. local time. They're set to close at their highest since January 2008. Swedish Match's market capitalization is 38.7 billion kronor ($5.5 billion). "There is a rumor that Philip Morris is showing interest in Swedish Match, and the level mentioned is 182 kronor," said Michael Arnhuvud, a trader at Sweden's Swedbank AB. Philip Morris spokeswoman Marija Sepic declined to comment, as did Swedish Match spokeswoman Rupini Bergstroem. PMI, the world's largest publicly traded cigarette maker, signed an agreement to distribute the Nordic company's snuff earlier this year, and bought Swedish Match's South African business last month. Swedish Match has lobbied for governments to ease restrictions on its main product, snus, a Scandinavian version of snuff that the company says is a less unhealthy alternative to cigarettes. The two companies would be "a perfect match" between "different business segments," said Rolf Karp, an analyst at Ohman Equities in Stockholm, who also said he had heard 182 kroner as the potential bid price. "Since I've covered this stock there has always been the recurrent rumor. The company never comments on speculation, and today it's just the same rumor. I wouldn't say it's unrealistic." JPMorgan Chase & Co. said in an e-mailed note to clients this afternoon that it doesn't think a bid from PMI will materialize, and recommended investors bet the shares will fall. PMI, which is based in New York and has its main offices in Lausanne, Switzerland, was spun off from Philip Morris USA owner Altria Group Inc. in 2008. It holds its former parent company's non-U.S. assets, and both companies make Marlboro cigarettes. PMI Chief Financial Officer Hermann Waldemer said in June that he estimates there's a 50 percent chance the European Union would end its ban on Swedish snuff. Enditem