PMI’s Swedish Match deal in the balance as activist investor increases stake
October 1, 2022
American investment management firm Elliott Management Corp, which has raised its stake in Swedish Match, would consider taking a seat on the board of the Stockholm-based maker of Zyn nicotine pouches, Reuters reported citing a source familiar with the matter.
Along with three other investors and a chair, Elliott is on a nominating committee that under Swedish law can evaluate who should be on Swedish Match’s board, according to the Swedish Match website.
Philip Morris International’s (PMI) $16 billion offer for Swedish Match is hanging in the balance after Elliott disclosed on Friday that it had increased its stake to 7.25 per cent from 5.5 per cent.
By Swedish law, 90 per cent of Swedish Match shareholders need to approve the offer before Oct. 21, but some oppose the 106 Swedish crown per share bid for one of the world’s biggest makers of oral nicotine products.
Elliott, an activist hedge fund manager, declined to comment.
Bloomberg reported in July that the activist investor was believed to be planning to oppose the deal under its current terms. Elliott’s increased stake means the offer will fail if another 2.75 per cent of shareholders take a similar view.
PMI and Swedish Match did not immediately respond to requests for comment.
PMI in May offered to buy the company in a bet on the fast-growing market for cigarette alternatives.
According to Euromonitor International, Swedish Match controls about half the world market for snus – a Swedish-style snuff that is moist and smoke-free. The company is also the global industry leader for nicotine pouches.
Swedish Match shares traded at 110 crowns on Friday and have been trading above the offer price since late July, suggesting investors anticipate PMI will need to make a higher bid.
PMI chief executive Jacek Olczak told Reuters this week the company is not considering withdrawing its offer despite deteriorating global economic conditions and has “options on the table” including holding a majority stake.
Shareholder Framtiden Partnerships, which has held Swedish Match shares for nearly two decades and owns 1 per cent, last week announced that it opposes the takeover.
(Reuters)
