Philip Morris International, the owner of the Marlboro brand, announced Wednesday that it has offered $16 billion to acquire smokeless tobacco company Swedish Match, as the US group aims to move away from the traditional cigarette business.
Swedish Match management has asked its shareholders to accept an offer of 106 Swedish crowns per share, nearly 40% more than its closing share price on Monday, the two companies said in separate statements.
The deal is expected to be worth 161.2 billion Swedish kronor (about 16 billion dollars), and Swedish Match derives more than 65 percent of its revenue from smoke-free products, including chewing tobacco and the Zain brand of nicotine bags.
In 2016, Philip Morris announced a long-term goal to stop selling cigarettes and replace them with alternatives it says are less harmful.
The US company sells cigarette brands such as Marlboro and Chesterfield in 180 markets outside the US and has invested billions of dollars since 2008 in vapor products, oral nicotine and other “low-risk” products.
Last year, Philip Morris sealed a controversial takeover of British ventilator maker Victora, despite fierce opposition from health activists and medical groups.
The group plans to earn at least $1 billion in net annual revenue from nicotine-free products by 2025.
Philip Morris and Swedish Match confirmed acquisition deal talks on Monday following a Wall Street Journal report.
“We are delighted to announce this exciting next step in Philip Morris International and Swedish Match’s journey toward a smoke-free future,” CEO Jacek Olczak said in a statement.
Swedish Match President Kony Carlson told AFP that the deal was a “good offer” for shareholders. “It is great to have the opportunity to expand the distribution of our products, which can compete with cigarettes,” he said.