(Bloomberg) -- Philip Morris International Inc. is proceeding with the $16 billion takeover of nicotine pouch maker Swedish Match AB after securing support from enough shareholders, including Elliott Investment Management LP.
The transaction had been in doubt as it was unclear if Elliott, the largest shareholder, would back the deal, which was contingent on getting 90% support.
Philip Morris said Monday it has the backing of 83% of shareholders, including its top 10, and waived the acceptance level to give remaining investors time to agree to the offer.
The takeover will allow the maker of Marlboro cigarettes to accelerate its goal of achieving half of its revenue from alternative smoking products by 2025.
Swedish Match and its US distribution network would give Philip Morris a foothold in the biggest market for alternative smoking products including vaping devices, nicotine pouches and heated tobacco.
That foretells a big battle with Altria Inc. in the field of smoking substitutes. Last month, PMI’s former sister company teamed up with Japan Tobacco International on an international alliance to offer smokers alternatives to cigarettes.
‘Good Path’
Swedish Match shares rose 0.7% to 115.80 kronor in Stockholm. Philip Morris is lowering the bid to 115.07 kronor for outstanding investors to adjust for a dividend payment.
Investors now have until Nov. 25 before Philip Morris plans to take Swedish Match private. If it gets more than 90%, Philip Morris can force any remaining shareholders to sell their stock.
“At the level we are at today, we are on a good path,” Chief Executive Officer Jacek Olczak said in an interview.
The company will reach out to any remaining Swedish Match shareholders to discuss the merits of the extended offer, Olczak said. The company is still willing to go ahead with the takeover if it doesn’t get to the 90% acceptance level that would allow a squeeze out under Swedish regulations.
Olczak said he expects index funds that hold shares to tender now that the offer is unconditional.
Bloomberg News reported on Sunday that Philip Morris’s improved offer won backing from Elliott, the biggest shareholder with a 10.5% stake.
--With assistance from Julian Harris.
(Updates with shares in seventh paragraph, CEO comments starting in ninth)
©2022 Bloomberg L.P.
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