PMI To Buy Swedish Match South Africa

[justintempler]

Link - Source

July 02, 2009 02:45 AM Eastern Daylight Time
Philip Morris International Announces Agreement to Acquire Swedish Match South Africa for $222 Million
NEW YORK--(BUSINESS WIRE)--Regulatory News:

Philip Morris International Inc. [NYSE / Euronext Paris: PM] (PMI) announced today that the company has entered into an agreement with Swedish Match AB to purchase its South African affiliate, Swedish Match South Africa (Proprietary) Limited (SMSA) for ZAR 1.75 billion (approximately $222 million).

SMSA is the market leader in the South African pipe tobacco and snuff categories, which represent an estimated 31% of total tobacco consumption. In 2008, SMSA reported net revenues of ZAR 687 million. Its principal brands include Boxer, Best Blend and Taxi.

“This financially attractive acquisition represents an excellent strategic fit for our business in South Africa,” said Jean-Claude Kunz, President of PMI’s Eastern Europe, Middle East & Africa Region. “We firmly believe that merging the two businesses will provide us with the talent, infrastructure and expertise to further build and grow our portfolio of strong brands in this important market.”

The transaction is subject to approval by the relevant South African regulatory authorities and is expected to be completed by the end of the fourth quarter 2009. It is anticipated that the acquisition will be immediately marginally accretive to PMI’s earnings per share.

About Philip Morris International Inc.

Philip Morris International (PMI) [NYSE / Euronext Paris: PM] is the leading international tobacco company, with seven of the world’s top 15 brands including Marlboro, the number one cigarette brand worldwide. PMI has more than 75,000 employees and its products are sold in over 160 countries. In 2008, the Company held an estimated 15.6% share of the international cigarette market outside of the United States. For more information, see www.pmintl.com.

[Premium Parrots]

damit .............I was gonna buy it next week.

[tom502]

I've had a few SA snuffs, which arn't bad. I am suprised no US company has tried to enter the market for specifically nasal snuffs.

[jcarlson]

Is anyone else bothered by this, besides me? I can see PMI buying SM as a whole one day, and I find that disturbing. Ya, they have the marketing power, but they also have the power to change formulas once they control something. I don't know...just being paranoid.

[KarlvB]

Question is if the main shareholders will agree to a take over

Looks like the bulk is held by institutional shareholders and unless it is in their interest they wouldn't sell up.

Besides I think SM took the view that the SA market wasn't enough of a revenue generator in the long term since the government there is coming down hard on smoking. Also with the increasing upwards mobility of the general population RYO is falling out of favour IMO as it has traditionally been seen as a poor man's option.

PMI seems far more interested in emerging markets to keep driving revenue from its key target market (smokers).

Then there is this from the SM annual report.

"Of our existing businesses, the organic growth prospects are best in our smokefree portfolio. This is also where we have many of our core competencies. We have a unique heritage, strong brands, and a talented
organization. We know the consumer and we have a technological lead. Social and regulatory trends support the growth of smokefree products, and in particular more modern forms like Swedish Snus"

The regulators might also block an acquisition. Would the Swedes allow a big national interest like SM to be sold? Don't know. If they did I'd guess they'd put safeguards in place to ensure that the snus remains the same quality.

Having said that I am slightly worried as well....I'd hate to see SM become part of a big entity like PMI, but ultimately PMI would be stupid to change anything if they did buy SM. If they did buy SM it would be for the expertise, technology and market share. Tinker with the product and they will lose market share

[sagedil]

From what I understand, a more likely scenario would be SM buying PMI

[Lucky Striker]

From what I take of it, a global merger would be more plausible than any of the two buying each other outright.

Anyway, this is reinforcing what I've been saying since last year. Phillip Morris and Swedish Match combined equal the largest tobacco company in the world. Swedish Match partners up with Phillip Morris NA while over in South Africa PMI takes over that arm of SM. And people still deny that they're all interconnected. Strange.

[sheilalynn]

I've already decided after that Family Tobacco bill was passed a few weeks ago that I'd never touch a Philip Morris product after the sneaky way they got it passed. If they do buy out SM in South Africa, they won't stop there. So, once they do own all of SM, there will be no more SM products coming in this house either.

Have you actually read what Philip Morris put as a description for their "wannabe snus"? Dried tobacco in a pouch with a "flavor strip"...wtf! :shock:

[Lucky Striker]

Seeing as my two favorite brands aren't Swedish Match products, I could take them or leave them. I was reading on another forum where somebody pointed out that if you're going to boycott Phillip Morris, it would be hypocritical to not do the same with Swedish Match since they backed Phillip Morris the whole time this legislation was set to pass. To each their own I guess.