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It said the offer value for the Stockholm-listed company amounted to about 161.2 billion Swedish crowns ($16 billion).
Swedish Match shares hit a record high on Tuesday after PMI confirmed reports it was in talks to buy the Swedish firm, betting on the fast-growing market for cigarette alternatives. Swedish Match shares rose a further 9% on Wednesday at 103.50 crowns.
The Swedish company makes most of its profit from Swedish-style snuff called “snus”, but sales of its Zyn tobacco-free nicotine pouches are growing rapidly in Scandinavia and the United States as consumers become more health-conscious.
PMI was spun off from U.S. peer Altria (NYSE:MO) in 2008.
Acquiring Swedish Match would give PMI, which is U.S.-based but does not sell its products in the United States, access to a ready-made distribution network, taking on its former owners in its home market.
Swedish Match, which reported first-quarter earnings on Wednesday that were slightly below market expectations, said sales and profits from Zyn grew significantly in the United States, with deliveries up 35%.
The Swedish Match board said in a statement it believed “the terms of the offer recognise Swedish Match’s long-term growth prospects, taking into account the risks associated with the realisation of those prospects”.
The resolution was supported by all board members save one, a representative of trade union IF Metall, who said Swedish Match had the competence and experience to remain independent and that the offer did not reflect its long-term fundamental value.
Analysts at Credit Suisse said they had a positive view on the bid level, saying it represented a roughly 40% premium to its previously undisturbed price.
PMI said completing the offer was conditional on regulatory approval and on no other company making an offer that was more favourable to Swedish Match’s shareholders.
($1 = 10.0381 Swedish crowns)
