Philip Morris increases offer to $15.7B for Swedish Match

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Philip Morris International (NYSE:PM) hiked its bid for Swedish Match (OTCPK:SWMAY) on Thursday.

The new offer of SEK 116 ($10.34) in cash per share from a prior SEK 106 ($9.44) per share bid. The size of the deal had fallen significantly in USD terms since the initial offer due to the weakening of the Swedish Krona against the dollar, prompting hedge funds to call for a higher bid.

The latest bid is valued at about $15.7B, still below the nearly $16B of the initial offer’s equivalent price in May. Philip Morris (PM) Jacek Olczak said the revised bid will be the best and final offer.

“We believe the best and final price in our revised offer for Swedish Match provides very compelling value for the shareholders of both Swedish Match and PMI,” he 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. 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 90% acceptance stipulation specified in the initial offer will remain in place. Shares of Swedish Match (OTCPK:SWMAY) listed in Stockholm rose sharply during the European afternoon session, while Philip Morris (PM) shares marked a modest gain in premarket trading.

“Should the offer fail, we are well prepared to proceed autonomously to develop IQOS and the rest of our smoke-free portfolio in the U.S.,” Olczak concluded.

Read more on the details of IQOS projections outlined in the tobacco giant’s earnings on Thursday.