Swedish Match results will embolden deal resisters

Staff are seen at a Swedish Match moist powder tobacco “snus” store in Stockholm, Sweden, October 24, 2018. REUTERS/Anna Ringstrom

LONDON, July 22 (Reuters Breakingviews) – Swedish Match (SWMA.ST) investors will be watching its financial performance more closely than usual. The Nordic nicotine pouch maker is the target of a $16 billion takeover by rival tobacco group Philip Morris International (PM.N). Investors including activist Elliott Investment Management oppose the deal, and Friday’s results make the dissenters’ argument marginally stronger.

Swedish Match’s second-quarter sales and operating profit beat market expectations, aided by growth in the United States. Sales grew 23% to 5.5 billion Swedish crowns ($535 million), compared to 5.3 billion crowns expected by analysts. These results make it more difficult for PMI Chief Executive Jacek Olczak to convince 90% of investors that Swedish Match will be worse off alone. Olczak is already unlikely to swing a massive financial return from the deal, and there’s a chance he alters the Sept. 30 deadline for acceptance. Still, Swedish Match’s financial outlook has given investors reason to think twice about the deal. (By Dasha Afanasieva)

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(The author is a Reuters Breakingviews columnist. The opinions expressed are their own.)

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