Philip Morris clinches Swedish Match after smoking out opposition

Nov 7 (Reuters) – Marlboro creator Philip Morris International (PMI) (PM.N) overcame some opposition to clinch 83% of Swedish Match (SWMA.ST), brief of the 90% it needed but sufficient to convince it to press on with a $16 billion deal that will reduce its exposure to cigarettes.

PMI had earlier explained it could fall its bid if it did not access the 90% threshold at which it can begin a compulsory acquire of remaining shares.

The US team reported on Monday it believed that degree could finally be obtained, and that Swedish Match’s 10 greatest shareholders experienced acknowledged its bid.

That would necessarily mean activist investor Elliott Administration, which had constructed a 10.5% stake in Swedish Match and opposed PMI’s present, experienced tendered its shares. Elliott declined to remark.

“Our intention is however to take the organization solely private, so it is far better for the (Swedish Match) shareholders if they tender their shares,” PMI Chief Govt Jacek Olczak instructed Reuters.

PMI reported it experienced prolonged its present, now unconditional, right up until Nov. 25 in the hope of additional raising its stake, and Olczak reported that could guide some index funds that have not previously tendered their shares to do so, in addition to other holdouts

PMI produced a 106 crowns for every share offer to invest in Swedish Match in May well, and then lifted it to 116 crowns per share in Oct soon after some traders said the preliminary value was much too very low.

Purchasing Swedish Match, with its common damp snuff “snus” products and tobacco-totally free nicotine “ZYN” pouches, will aid PMI in its mentioned ambition to move away from health-harming cigarettes and at some point come to be a smoke-totally free enterprise.

The deal will also help pave the way for PMI into the US market, exactly where Swedish Match has developed its enterprise quickly and the place PMI is currently absent.

“I see powerful industrial logic in the mixture and see Swedish Match being ready to do matters with PMI in equally situations,” Swedish Match CEO Lars Dahlgren claimed, referring to whether the organization is delisted or remains stated with PMI as its bulk shareholder.

Asked about his long run with the corporation, Dahlgren, who has been its CEO because 2008, stated it remained to be found since there was no official agreement in put, but additional he “relished performing at Swedish Match”.

Jefferies analysts said in a notice to shoppers that to secure Elliott’s approval, PMI could have likely promised a exclusive dividend or a seat on its board to the trader.

In accordance to Reuters calculations, Elliott stands to make a financial gain of more than $100 million, or more than a 6.4% return, on its investment.

PMI and Elliott declined to remark.

John Hempton, co-founder of Sydney-based mostly Bronte Money, has also been versus the offer, but mentioned on Sunday he would tender his shares if Elliott had finished the exact same.

Reporting by Marie Mannes Enhancing by Terje Solsvik and Mark Potter

Our Criteria: The Thomson Reuters Have confidence in Ideas.