Chicago-based Framtiden Partnerships, a Swedish Match shareholder for nearly two decades, is opposing Philip Morris’ (PMI) proposed takeover of the Stockholm-based company, reports Reuters.
The investor – incorporating Framtiden Management Company LLC and affiliates – which owns 1 per cent of Swedish Match, has written a white paper urging others to reject the deal that 90 per cent of shareholders need to approve before 21 October, by Swedish law.
Framtiden believes PMI’s SEK 106 (USD 9.63) per share offer “does not adequately value Swedish Match’s leading position in the rapidly growing non-tobacco nicotine pouch segment in the United States”. Managing Member Dan Juran estimates the business to be worth about SEK 200 per share.
Juran, who is also chairman of Swedish Match’s nominating committee, warned other investors not to be “tempted by the short-term premium” PMI had offered. His Swedish Match position accounts for more than a quarter of his total capital. “I was dismayed to see the board recommend the sale of this Swedish jewel at a bargain price in the early stage of probably the greatest chapter in its long history,” Juran said.
Swedish Match has been trading above the SEK 106 offer price since late July, suggesting investors anticipate PMI will need to make a higher offer, according to Reuters.
DNB Markets analyst Jesper Ingildsen said it is currently highly uncertain whether PMI will be able to cross the required 90 per cent threshold to take over the whole company. Swedish Match has a fragmented ownership base, he said, making it difficult to get a clear overview of how many would accept the deal.
John Hempton, co-founder of Sydney-based Bronte Capital, is another Swedish Match shareholder who hopes the deal will fall through. Hempton, who holds a 1 per cent stake in Swedish Match, told Reuters that he and other undisclosed shareholders believe that the company has the potential to become a USD 100 billion company that could claim 10-20 per cent of the US nicotine market. “There are basically three camps; those who plan on accepting the deal, those who will try to get the offer price increased, and those who want Swedish Match to stay as Swedish Match, and I am firmly in the last camp,” Hempton was quoted as saying.