BERGEN OP ZOOM, Netherlands–(BUSINESS WIRE)–Regulatory News:
Philip Morris International Inc. (NYSE:PM) (SWX:PMI):
This announcement is not an offer, whether directly or indirectly, in Australia, Hong Kong, Japan, New Zealand or South Africa or in any other jurisdiction where such offer pursuant to legislation and regulations in such relevant jurisdiction would be prohibited by applicable law. Shareholders not resident in Sweden who wish to accept the Offer (as defined below) must make inquiries concerning applicable legislation and possible tax consequences. Shareholders should refer to the offer restrictions included in the section titled “Important information” at the end of this announcement and in the offer document which will be published shortly before the beginning of the acceptance period for the Offer. Shareholders in the United States should also refer to the section titled “Special notice to shareholders in the United States” at the end of this announcement.
Philip Morris Holland Holdings B.V.1 (“PMHH”), an affiliate of Philip Morris International Inc. (“PMI”), hereby announces a recommended public offer to the shareholders of Swedish Match AB (“Swedish Match” or the “Company”) to tender all shares in Swedish Match2 to PMHH at a price of SEK 106 in cash per share (the “Offer”). The shares in Swedish Match are listed on Nasdaq Stockholm, Large Cap.
The shareholders of Swedish Match are offered SEK 106 in cash per share in Swedish Match.3
The total value of the Offer amounts to approximately SEK 161.2 billion, corresponding to approximately USD 16.0 billion4.
The price offered for the shares represents a premium of 39.4 percent compared to the closing share price of SEK 76.06 on May 9, 2022; 39.7 percent compared to the volume-weighted average trading price of SEK 75.86 during the last 30 trading days ended on May 9, 2022; and 46.6 percent compared to the volume-weighted average trading price of SEK 72.33 during the last 90 trading days ended on May 9, 2022.
The board of directors of Swedish Match recommends that Swedish Match’s shareholders accept the Offer. The recommendation is supported by a fairness opinion provided by SEB Corporate Finance, Skandinaviska Enskilda Banken AB (publ) (“SEB Corporate Finance”).
An offer document regarding the Offer is expected to be made public on or around June 22, 2022. The acceptance period in the Offer is expected to commence on or around June 23, 2022 and expire on or around September 30, 2022.
The Offer is conditional upon the Offer being accepted to such extent that PMHH becomes the owner of shares representing more than 90 percent of the total number of outstanding shares in Swedish Match (on a fully diluted basis). Further, the Offer will be made on the terms and subject to the conditions 2 – 7 set out below in this announcement.
Jacek Olczak, Chief Executive Officer of PMI, comments:
“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future. Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion—strengthened by complementary geographic footprints, commercial capabilities and product portfolios—and open up significant platforms for growth in the U.S. and internationally. Swedish Match’s dedicated employees and management have steadfastly pursued the company’s vision of a world without cigarettes, while delivering very strong results. We look forward to building upon this success and joining forces to accelerate our shared smoke-free mission.”
Background and reasons for the Offer
In 2016, PMI announced its new mission to replace cigarettes with science-based, less harmful alternatives as soon as possible—to the benefit of people who smoke, public health, PMI, and society. The proof of PMI’s commitment to this mission and strong progress to date is undeniable: In 2015, essentially all of PMI’s net revenues came from cigarettes. In 2021, nearly 30 percent came from smoke-free products. By 2025, PMI aims to be a predominantly smoke-free company, with more than half of its net revenues coming from such products.
While cigarettes represent PMI’s past and are part of its present, they do not represent its future. Since 2008, PMI has invested more than USD 9 billion in researching, developing, and commercializing its smoke-free products. PMI has built world-class scientific assessment capabilities, notably in the areas of preclinical systems toxicology, clinical and behavioral research, as well as post-market studies. And it has met the strictest regulatory requirements for its sector, including in the U.S., where the Food and Drug Administration has authorized versions of PMI’s leading heated tobacco product, IQOS, as “modified risk tobacco products” (MRTPs), finding that exposure modification orders for these products are appropriate to promote the public health.
PMI and Swedish Match share a mutual vision of a world without cigarettes and a strong commitment to developing, scientifically substantiating, and responsibly commercializing smoke-free products that are less harmful than cigarettes. PMI values how Swedish Match has relentlessly pursued tobacco harm reduction through its range of smoke-free products; received authorizations for its products via strict regulatory pathways in the U.S.; and reshaped the public health environment in countries such as Sweden and Norway.
As PMI continues to evolve its business for the long term, it believes that the two companies would be a perfect pairing of strategic vision, culture, and enterprise. Together, the companies would be able to create a global, science-led smoke-free champion, combining expertise in heated tobacco and oral nicotine—including multiple MRTP authorizations—as well as PMI’s emerging presence in e-vapor products, to switch more adult smokers to better alternatives than the two could achieve as separate companies. Swedish Match would lead the combined company’s oral nicotine business.
The combination with Swedish Match would position PMI to:
create a comprehensive smoke-free product portfolio globally, underpinned by a leading R&D engine for science, innovation, and growth through the companies’ complementary capabilities;
directly enter and compete in the large, attractive and growing U.S. smoke-free market by: (i) further supporting and developing Swedish Match’s oral nicotine portfolio in the U.S. and (ii) leveraging Swedish Match’s substantial operational platform in the U.S. to unlock commercial opportunities across other smoke-free categories in the coming years; and
drive accelerated global expansion opportunities for Swedish Match’s oral nicotine products through PMI’s international commercial infrastructure and financial resources.
Therefore, the combination would immediately enhance PMI’s already strong growth profile and support additional opportunities in the U.S. and internationally over time. It is also expected to be accretive to adjusted diluted EPS before any synergies, and excluding transaction-related costs as well as the amortization of acquired intangibles. Importantly, Swedish Match’s operating cash flow comprises meaningful U.S. dollar net income, thereby improving PMI’s currency profile.
The transaction would result in a combined company with a strong balance sheet and leverage of approximately 3x net debt to adjusted EBITDA at closing, with deleveraging anticipated over the next few years. PMI would continue to target strong investment grade credit ratings over time, as a growing and highly cash-generative business. To support deleveraging, PMI has suspended its current three-year share repurchase program, which began in July 2021. PMI remains committed to its progressive dividend policy, while gradually reducing its adjusted diluted EPS payout ratio to around 75% over time.
PMI recognizes that the employees and management team of Swedish Match have built a highly successful business with an excellent track record, and PMI has the utmost respect for them. PMI’s current plans for the future business and general strategy, as described above, do not include any material changes with regard to Swedish Match’s operational sites, or its management and employees, including their terms of employment. Swedish Match has a complementary organization with a talented, dedicated workforce, excellent culture and a strong base of skills in Sweden, the U.S. and across the world. PMI would intend to nurture this talent and provide additional opportunities as the companies grow together. Importantly, PMI intends to provide compensation and benefits consistent with Swedish Match’s current programs, including the Profit Sharing Foundation in Sweden. In addition, PMI intends to preserve and develop Swedish Match’s operational presence in Sweden, where much of the Company’s skills base is located, as well as in Richmond, Virginia, the site of the head office for Swedish Match’s U.S. Division. PMI has no plans to divest the Lights business.
The shareholders of Swedish Match are offered SEK 106 in cash per share in Swedish Match.5
American Depositary Shares representing the right to receive shares in Swedish Match in connection with unsponsored American Depositary Receipt programs are not included in the Offer.
If, prior to settlement of the Offer, Swedish Match (i) distributes dividends6 or (ii) in any other way distributes or transfers value to its shareholders, the consideration in the Offer will be reduced accordingly (the “Price Adjustment”). In such circumstances, PMHH may decide to apply such Price Adjustment or invoke condition 7 to completion of the Offer (see below).
No commission will be charged by PMHH in respect of the settlement of the Swedish Match shares tendered to PMHH under the Offer.
The price per share in the Offer represents a premium of7:
39.4 percent compared to the closing share price of SEK 76.06 on May 9, 2022 (the last day of trading prior to market speculation regarding a potential public offer for the Company)8;
39.7 percent compared to the volume-weighted average trading price of SEK 75.86 for the shares during the last 30 trading days ended on May 9, 2022 (the last day of trading prior to market speculation regarding a potential public offer for the Company)9; and
46.6 percent compared to the volume-weighted average trading price of SEK 72.33 for the shares during the last 90 trading days ended on May 9, 2022 (the last day of trading prior to market speculation regarding a potential public offer for the Company)10.
Total value of the Offer
The total value of the Offer, based on all outstanding 1,520,714,190 shares11 in Swedish Match, amounts to approximately SEK 161.2 billion.12
Statement from the board of directors of Swedish Match and fairness opinion
The board of directors of Swedish Match has assessed the Offer and informed PMHH that the board of directors of Swedish Match has resolved to recommend that the shareholders of Swedish Match accept the Offer. The board of directors of Swedish Match has further informed PMHH that the board of directors of Swedish Match has obtained a fairness opinion from SEB Corporate Finance, according to which the Offer is fair for Swedish Match’s shareholders from a financial perspective.
PMHH’s shareholding in Swedish Match
Neither PMHH nor any closely related companies or closely related parties own any shares or other financial instruments in Swedish Match that give financial exposure to Swedish Match’s shares at the time of this announcement, nor has PMHH or any closely related companies or closely related parties acquired or taken measures to acquire any shares in Swedish Match or any financial instruments that give financial exposure to Swedish Match’s shares during the six months preceding this announcement.
To the extent permissible under applicable law or regulations, PMHH and its affiliates may acquire, or take measures to acquire, shares in Swedish Match in other ways than through the Offer. Information about such acquisitions of shares, or measures to acquire shares, will be disclosed in accordance with applicable laws and regulations.
Conditions for completion of the Offer
Completion of the Offer is conditional upon:
the Offer being accepted to such extent that PMHH becomes the owner of shares representing more than 90 percent of the total number of outstanding shares in Swedish Match (on a fully diluted basis)13;
no other party announcing an offer to acquire shares in Swedish Match on terms that are more favorable to the shareholders of Swedish Match than the Offer;
with respect to the Offer and completion of the acquisition of Swedish Match, receipt of all necessary regulatory, governmental or similar clearances, approvals, decisions and other actions from authorities or similar, including from competition authorities, in each case on terms which, in PMHH’s opinion, are acceptable;
neither the Offer nor the acquisition of Swedish Match being rendered wholly or partially impossible or significantly impeded as a result of legislation or other regulation, any decision of a court or public authority, or any similar circumstance;
no circumstances having occurred which could have a material adverse effect or could reasonably be expected to have a material adverse effect on Swedish Match’s financial position, business or operation, including Swedish Match’s sales, results, liquidity, equity ratio, equity or assets;
no information made public by Swedish Match, or otherwise made available to PMHH by Swedish Match, being inaccurate, incomplete or misleading, and Swedish Match having made public all information which should have been made public; and
Swedish Match not taking any action that is likely to impair the prerequisites for making or completing the Offer.
PMHH reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions are not satisfied or cannot be satisfied. However, with regard to conditions 2 – 7 above, the Offer may only be withdrawn where the non-satisfaction of such condition is of material importance to PMHH’s transaction with Swedish Match or if otherwise approved by the Swedish Securities Council (Sw. Aktiemarknadsnämnden).
PMHH reserves the right to waive, in whole or in part, one or more of the conditions set out above (including, with respect to condition 1 above, to complete the Offer at a lower level of acceptance).
Information about PMHH and PMI
PMHH is a Dutch private limited liability company (Besloten Vennootschap) with corporate registration number 20028955, with corporate seat and headquarters in Marconilaan 20, 4622RD, Bergen op Zoom, the Netherlands, indirectly wholly-owned by PMI. PMHH was incorporated on February 26, 1969. PMHH is a financial holding company.
PMI is a leading international tobacco company working to deliver a smoke-free future and evolving its portfolio for the long term to include products outside of the tobacco and nicotine sector. PMI’s current product portfolio primarily consists of cigarettes and smoke-free products, including heat-not-burn, vapor and oral nicotine products, which are sold in markets outside the U.S. Since 2008, PMI has invested more than USD 9 billion to develop, scientifically substantiate and commercialize innovative smoke-free products for adults who would otherwise continue to smoke, with the goal of completely ending the sale of cigarettes. This includes the building of world-class scientific assessment capabilities, notably in the areas of pre-clinical systems toxicology, clinical and behavioral research, as well as post-market studies. The U.S. Food and Drug Administration (FDA) has authorized the marketing of versions of PMI’s IQOS Platform 1 devices and consumables as modified risk tobacco products (MRTPs), finding that exposure modification orders for these products are appropriate to promote the public health. As of March 31, 2022, PMI’s smoke-free products were available for sale in 71 markets, and PMI estimates that approximately 12.7 million adults around the world, excluding Russia and Ukraine, had already switched to IQOS and stopped smoking. With a strong foundation and significant expertise in life sciences, in February 2021 PMI announced its ambition to expand into wellness and healthcare areas and deliver innovative products and solutions that aim to address unmet consumer and patient needs.
PMI is an American corporation, incorporated in Virginia and headquartered in New York City, in the United States of America. PMI’s shares are traded on the New York Stock Exchange.
Financing of the Offer
The consideration payable in respect of the Offer is fully secured by funds which PMI has undertaken to contribute, directly or indirectly, to PMHH. PMI’s undertaking to contribute funds is fully secured by funds available to PMI pursuant to debt financing committed to be provided by Bank of America and Citi on terms which are customary for the financing of public offers.
The above-mentioned undertaking from PMI and financing will provide PMHH with sufficient cash resources to satisfy in full the consideration payable in respect of the Offer and, accordingly, completion of the Offer is not subject to any financing condition.
Review of information in connection with the Offer
PMHH has been permitted by the board of directors of Swedish Match to carry out a limited confirmatory due diligence review of Swedish Match in connection with the preparation of the Offer. Except for the interim report for January – March 2022, which will be made public by Swedish Match on May 11, 2022, Swedish Match has informed PMHH that no inside information has been disclosed to PMHH during the process.
Approvals from authorities
The completion of the Offer is conditional upon, inter alia, all necessary regulatory, governmental or similar clearances, approvals, decisions and other actions from authorities or similar, including from competition authorities being obtained, in each case on terms which, in PMHH’s opinion, are acceptable.
According to PMHH’s assessment, the transaction will require customary merger control approvals (and foreign direct investment approvals) including in the European Union, the United States, and Brazil. PMHH has initiated the work on filings relevant for the transaction. PMHH expects relevant clearances to be obtained prior to the end of the acceptance period.
Statement from the Swedish Securities Council
The Swedish Securities Council has in its ruling AMN 2022:20 granted an exemption from Rule II.7 of the Takeover Rules for Nasdaq Stockholm (the “Takeover Rules”) and allowed PMHH to set the initial acceptance period in the Offer to up to 15 weeks from publication of the offer document.
AMN 2022:20 will be available in its entirety on the Swedish Securities Council’s website (www.aktiemarknadsnamnden.se).
Publication of the offer document
June 22, 2022
June 23, 2022 – September 30, 2022
Commencement of settlement
Week of October 3, 2022
PMHH reserves the right to extend the acceptance period and, to the extent necessary and permissible, will do so in order for the acceptance period to cover applicable decision-making procedures at relevant authorities. PMHH also reserves the right to postpone the settlement date. PMHH will announce any extension of the acceptance period and/or postponement of the settlement date by a press release in accordance with applicable laws and regulations.
Compulsory redemption proceedings and delisting
As soon as possible after PMHH has acquired shares representing more than 90 percent of the total number of shares in Swedish Match15, PMHH intends to commence compulsory redemption proceedings under the Swedish Companies Act (Sw. aktiebolagslagen (2005:551)) to acquire all remaining shares in Swedish Match. In connection therewith, PMHH intends to promote delisting of Swedish Match’s shares from Nasdaq Stockholm.
Applicable law and disputes
The Offer, as well as any agreements entered into between PMHH and the shareholders in Swedish Match as a result of the Offer, shall be governed and construed in accordance with substantive Swedish law. Any dispute regarding the Offer, or which arises in connection therewith, shall be settled exclusively by Swedish courts, and the Stockholm District Court (Sw. Stockholms tingsrätt) shall be the court of first instance.
The Takeover Rules and the Swedish Securities Council’s statements and rulings regarding interpretation and application of the Takeover Rules are applicable to the Offer. PMHH has, in accordance with the Swedish Act on Public Takeovers on the Stock Market (Sw. lagen (2006:451) om offentliga uppköpserbjudanden på aktiemarknaden), on May 10, 2022, undertaken to Nasdaq Stockholm AB (“Nasdaq”) to fully comply with such rules and statements and to be subject to any sanctions that may be imposed by Nasdaq in event of a breach of the Takeover Rules. On May 11, 2022, PMHH informed the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) about the Offer and the above-mentioned undertaking towards Nasdaq.
BofA Securities and Citigroup Global Markets Limited are acting as financial advisors to PMHH in connection with the Offer. Roschier Advokatbyrå (lead counsel), DLA Piper (international counsel), Clifford Chance, and Davis Polk & Wardwell are legal advisors to PMHH in connection with the Offer.
Philip Morris Holland Holdings B.V.
The board of directors
For additional information, please contact:
New York: +1 (917) 663 2233
Lausanne: +41 (0)58 242 4666
Lausanne: +41 (0)58 242 4500
For administrative questions regarding the Offer, please contact your bank or the nominee registered as holder of your shares.
The information was submitted for publication on May 11, 2022 at 7.30 a.m. (CEST).
Information about the Offer
This press release has been published in Swedish and English. In the event of any discrepancy in content between the two language versions, the Swedish version shall prevail.
This announcement is not an offer, whether directly or indirectly, in Australia, Hong Kong, Japan, New Zealand or South Africa or in any other jurisdiction where such offer pursuant to legislation and regulations in such relevant jurisdiction would be prohibited by applicable law (each a “Restricted Jurisdiction”).
The release, publication or distribution of this press release in or into jurisdictions other than Sweden may be restricted by law and therefore any persons who are subject to the laws and regulations of any jurisdiction other than Sweden should inform themselves about, and observe any applicable requirements. In particular, the ability of persons who are not resident in Sweden to accept the Offer may be affected by the laws and regulations of the relevant jurisdictions in which they are located. Any failure to comply with the applicable restrictions may constitute a violation of the securities laws and regulations of any such jurisdiction. To the fullest extent permitted by applicable laws and regulations, the companies and persons involved in the Offer disclaim any responsibility or liability for the violation of such restrictions by any person.
This announcement has been prepared for the purpose of complying with Swedish law, the Takeover Rules and the Swedish Securities Council’s rulings regarding interpretation and application of the Takeover Rules and the information disclosed may not be the same as that which would have been disclosed if this press release had been prepared in accordance with the laws and regulations of jurisdictions other than Sweden.
Philip Morris International
New York: +1 (917) 663 2233
Lausanne: +41 (0)58 242 4666
Lausanne: +41 (0)58 242 4500
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