NEW YORK and RICHMOND, Va. — Philip Morris International (PMI) increased its offer to buy Swedish Match AB by about 9.4%.
The total value of the deal, however, is roughly unchanged from the original offer because of the appreciation in the U.S. currency against the Swedish krona, the Wall Street Journal reported. Inflation, volatility in equity markets and changes in interest rates played a role in determining the new offer price, the Marlboro cigarette maker told the WSJ.
In May, PMI offered to buy Swedish Match for 106 Swedish kronor per share, which amounted to about $16 billion in U.S. currency. The board of directors for the Richmond, Va.-based maker of cigars and smoke-free tobacco products like Zyn recommended that shareholders accept the offer at the time. That price per share has now increased to 116 Swedish kronor, or about $15.8 billion. It will be PMI’s final offer, CEO Jacek Olczak said.
“The price in the revised offer primarily reflects the higher net value to PMI related to the portion of Swedish Match’s cash flows that are generated in U.S. dollars, given currency movements since the initial offer was announced in May,” Olczak said. “Moreover, we believe that the deterioration in the global economic outlook, equity markets and the interest rate environment since the time of the initial offer strengthens yet further the attractiveness of the revised offer to Swedish Match’s shareholders. The revised offer retains a 90% acceptance condition, which is critical to capture the full potential of the combination.”
Should the offer fail, Olczak said the company is “well prepared to proceed autonomously to develop IQOS and the rest of our smoke-free portfolio in the U.S.” At the same time it announced the increase in its Swedish Match bid Thursday, the New York-based company also shared that it would be ending its agreement with Altria to sell IQOS in the United States. This frees up PMI to market the product in the country as of April 30, 2024.
The acceptance period for the offer expires Friday, Nov. 4, PMI said. Except for the increased price, the terms and conditions of the offer are unchanged.
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