The manufacturer of IQOS decided to buy a European competitor

Philip Morris International is in talks to acquire Swedish Match, a competitor in the smokeless nicotine market, but the deal may not go through. Swedish Match is valued at $12-15 billion, PMI - $155 billion

Philip Morris International (PMI), one of the largest tobacco companies in the world, is in talks to buy its Swedish competitor Swedish Match, the American company's press service said. A similar statement was made in Swedish Match.

The report says that Swedish Match may make an offer, but discussions about a possible deal are still underway and its prospects remain unclear.

"PMI does not intend to make any further comments on the discussions until it is appropriate," the company said.

The companies' statements were a reaction to the publication of The Wall Street Journal, in which the sources of the publication spoke about a likely deal. According to the newspaper, Swedish Match is valued at $12-15 billion, while the market value of Philip Morris is $155 billion. WSJ interlocutors said that the parties could reach an agreement as early as this week, noting that the negotiations may still not lead to a deal.

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Philip Morris International manufactures products under the brands Marlboro, L&M, Chesterfield, Parliament, Bond Street, and the IQOS tobacco heating system brand in its portfolio). As of the end of March, according to the company, its tobacco heating systems are available in 71 countries, IQOS is used by about 12.7 million people worldwide, not counting RUSSIA and Ukraine.

Swedish Match (brands Longhorn, America's Best Chew and others) is engaged in the production of cigarettes, lighters and nicotine alternatives to smoking, in particular chewing tobacco. The last category of goods brought the company 73.7% of operating profit last year. The WSJ points out that Swedish Match achieved double-digit sales growth in 2021, driven primarily by its U.S. smoke-free division.

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The newspaper also writes that Philip Morris is taking drastic measures to diversify its product portfolio to rely less on cigarette sales: by 2025, the company intends to generate more than half of its net income from smoke-free products. As of 2021, these product categories in her portfolio generated 29% of her net income — $31.4 billion.

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Philip Morris International at the beginning of March announced the suspension of planned investments in the Russian market, including the cancellation of new product launches and innovative investments. The company then said it was reducing production in Russia and had already suspended the release of a number of its products. In late March, PMI began exploring options for business restructuring in Russia, including a possible asset transfer.

The company attributed this intention to "ongoing logistical difficulties and changes in the regulatory environment, which have a direct impact on the pace and volume of production of tobacco and nicotine-containing products."

In Russia, PMI has two factories - "Philip Morris Izhora" in the Leningrad region and "Philip Morris Kuban" in Krasnodar, as well as the organization of Philip Morris Sales and Marketing LLC with branches in about 100 Russian cities. The company has 3.2 thousand employees in Russia, the Russian market in 2021 accounted for 10% of the total share of shipped products and about 6% of net revenue.

 

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