(Bloomberg) -- Philip Morris International Inc. is sticking to its guns with the terms of its takeover of nicotine-pouch maker Swedish Match AB, potentially setting the scene for a battle with Elliott Investment Management LP over the $16 billion deal. 

The Swiss tobacco company said Friday it won’t waive a 90% shareholder acceptance level needed to complete the acquisition, even though Elliott has disclosed a 10.5% stake in Swedish Match -- enough to block the deal if it wants to. 

PMI Chief Executive Officer Jacek Olczak said the tobacco group was sticking to its “best and final” bid, and that the acceptance condition was “critical to capture the full potential of the combination” ahead of the bid’s expiry Nov. 4. 

If the sweetened offer of 116 kronor ($10.5) per share fails to gain acceptance from 90% of Swedish Match shareholders, PMI could walk away from the deal, which has been recommended by the target’s board. The bidder still has the right to lower the threshold.

While at least four other hedge funds that had built stakes in Swedish Match are poised to tender their stakes, Elliott’s intentions remain unclear. Bloomberg News reported in July that the activist investor planned to oppose PMI’s initial bid because it undervalued Swedish Match. The firm increased its stake in Swedish Match on Oct. 24, according to a filing from the Swedish financial regulator, just days after PMI bumped its offer. 

A representative for Elliott declined to comment.

The deal could give PMI a vast distribution network in the US for smoking alternatives like vaping, nicotine pouches and heated tobacco. The US is the world’s biggest market for such products and all of the major tobacco companies are jostling for position there. On Thursday, Altria Group Inc. formed a joint venture with Japan Tobacco International to promote two new cigarette alternatives.

PMI this month struck a separate $2.7 billion deal with Altria to buy the rights to sell its IQOS heated tobacco product in the US beginning in 2024. 

Should its offer for Swedish Match fail, “we are well prepared to proceed autonomously to develop IQOS and the rest of our smoke-free portfolio in the US,” Olczak said. 

Swedish Match shares were up 0.2% at 3:39 p.m. in Stockholm on Friday. Earlier in the day, the company reported third-quarter operating profit that missed analyst estimates. 

--With assistance from Christopher Jungstedt.

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