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Philip Morris clinches Swedish Match after smoking out opposition By Reuters

© Reuters. FILE PHOTO: Moist powder tobacco “snus” cans are seen on shelves at a Swedish Match store in Stockholm, Sweden October 24, 2018. Picture taken October 24, 2018. REUTERS/Anna Ringstrom

By Marie Mannes

(Reuters) – Marlboro maker Philip Morris International (NYSE:) (PMI) is going ahead with its $16 billion takeover of Swedish Match despite securing slightly less than the 90% stake it wanted, as the U.S. group presses on with its shift away from cigarettes.

PMI said on Monday it had secured 82.59% of the Swedish company, short of the 90% level at which it can start a compulsory purchase of remaining shares.

The U.S. group, which had said previously it could drop its bid if it did not reach that threshold, said it believed the level could ultimately be reached.

“Our intention is still to take the company entirely private, so it is better for the (Swedish Match) shareholders if they tender their shares,” PMI Chief Executive Jacek Olczak told Reuters.

PMI made an offer in May to buy Swedish Match for 106 crowns per share, and then raised it to 116 crowns per share in October after some investors said the initial price was too low.

Buying Swedish Match, with its popular wet snuff “snus” products and tobacco-free nicotine “ZYN” pouches, will aid PMI in its stated ambition to move away from health-harming cigarettes and eventually become a smoke-free company.

The deal will also help pave the way for PMI into the U.S. market, where Swedish Match has grown its business rapidly and where PMI is currently absent.

Olczak said he was looking forward to growing Swedish Match internationally using PMI’s infrastructure.

Swedish Match declined to comment.

PMI said it believed the ten largest shareholders of the Swedish group had accepted its bid and that its offer would be extended until Nov. 25 in the hope of further raising its stake.

That would mean both activist investor Elliott Management and Davidson Kempner, which had 10.5% and 5% stakes respectively, had tendered their shares.

Elliott, which has been building its stake in Swedish Match for months, reaching over 10% in October, had opposed PMI’s offer. It was not immediately available for comment.

John Hempton, co-founder of Sydney-based Bronte Capital, has also been against the deal, but said on Sunday he would tender his shares if Elliott had done the same.

GRAPHIC: Philip Morris takeover bid lights up Swedish Match shares (https://fingfx.thomsonreuters.com/gfx/mkt/zdpxdyemxpx/swedish.PNG)

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