Philip Morris International (PMI) announced a public cash offer of $16 billion to purchase Swedish Match.
If accepted by shareholders, the offer would accelerate PMI’s transformation into becoming a smoke-free company and position it to lead that transformation in the industry, noted Jacek Olczak, CEO of PMI in a May 11 webcast.
“This offer aims to join two leading smoke-free players to create a global champion,” Olczak said. “The visions of our two companies are aligned in working towards a smoke-free future without cigarettes, and this combination would accelerate our progress by switching more adult smokers to better alternatives than would be achieved as separate companies.”
Olczak pointed to the geographic footprints, R&D commercial capabilities, organizations and talent pools of the two companies, noting they are a business and a cultural fit.
Olczak also highlighted the success of Swedish Match’s ZYN branded product, which is the market leader in the U.S. nicotine pouch segment.
“In the U.S., the phenomenal performance of ZYN has catalyzed the category, which expanded volumes by around 80% last year alone,” Olczak noted. “Despite the entry of large competitors, ZYN retains the number one position with 64% share of the category in 2021.”
“If completed, we would have a comprehensive global smoke-free portfolio with leadership positions in heat-not-burn, and the fastest-growing category of oral nicotine, with potential for accelerated international expansion. Swedish Match has a full integrated platform focused on premium brands, which would fit very well with our business,” Olczak said.
The acceptance period for the offer is expected to begin on or around June 23, 2022, and end on or around Sept. 30, 2022, subject to any extensions.
Swedish Match’s board has recommended the offer, noting in a press release, “the Board believes that the terms of the offer recognize Swedish Match’s long-term growth prospects, taking into account the risks associated with the realization of those prospects.”
In order for the acquisition to go forward, 90% of Swedish Match’s shareholders would need to agree to the deal.
Swedish Match is a global company headquartered in Stockholm, Sweden. In addition to ZYN, Swedish Match’s well-known brands include General, Longhorn, Onico, America’s Best Chew, Thunder, Oliver Twist, White Owl, Game, Fiat Lux and Cricket (lighters). The company’s largest markets are in the U.S. and Scandinavia.
“Our ambition is to reach more than 50% smoke-free net revenues by 2025, as compared to 30% in Q1, 2022 and essentially zero in 2015 when we launched IQOS,” Olczak said. “The combination with Swedish Match would enable us to become smoke-free faster, with over 3 million adult users of Swedish Match smoke-free products, predominantly in the U.S., adding to the around 18 million IQOS users at March 31, excluding Russia and Ukraine.”
