Philip Morris says not considering withdrawing Swedish Match bid

Philip Morris is not considering withdrawing its offer for Swedish Match despite deteriorating global economic conditions and has “options on the table” including holding a majority stake, its CEO told Reuters.

The IQOS maker in May offered $16 billion to acquire the Stockholm-based smokeless tobacco company as the US group aims to move away from its traditional cigarette business.

Jacek Olczak told Reuters that since it made its original bid, the global macro-economic environment has changed. As a result, he believes the offer is “even more attractive than it was the time when we did offer it.”

The board of Swedish Match recommended that its shareholders accept the bid of 106 Swedish kronor per share, but some investors have recently come out against the bid, saying he offer “does not adequately value Swedish Match’s leading position in the rapidly growing non-tobacco nicotine pouch segment in the United States”.

By Swedish law, the deal needs to be approved by 90 per cent of shareholders before Oct. 21.

Meanwhile, European Union antitrust regulators have set Oct. 11 as a deadline for their preliminary review of the bid. They can clear the deal with or without remedies at the end of its scrutiny or open a four-month-long investigation if it has serious concerns.

Stockholm-based Swedish Match derives more than 65 percent of its revenue from smoke-free products, including chewing tobacco and the Zyn brand of nicotine pouches. The company is also known for making cigars and “snus”, a form of snuff particular to Nordic countries.

Philip Morris announced in 2016 a long-term goal to stop selling cigarettes and replace them with alternatives that it says are less harmful.