Philip Morris to buy Swedish Match in $16bn deal

US tobacco giant Philip Morris International has agreed to buy smokeless tobacco company Swedish Match in a $16bn deal.

Swedish Match shareholders will receive SEK 106 per share in cash, valuing the deal at around SEK 161.2bn. The price represents a 39% premium to the closing share price of Swedish Match on Monday, which was the last day before market speculation of a takeover emerged.

PMI chief executive Jacek Olczak said: "We are pleased to announce this exciting next step in Philip Morris International's and Swedish Match's trajectory toward a smoke-free future. Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion - strengthened by complementary geographic footprints, commercial capabilities and product portfolios - and open up significant platforms for growth in the US and internationally.

"Swedish Match's dedicated employees and management have steadfastly pursued the company's vision of a world without cigarettes, while delivering very strong results. We look forward to building upon this success and joining forces to accelerate our shared smoke-free mission."

The Marlboro maker said on Wednesday that the deal is expected to be accretive to adjusted diluted earnings per share before any synergies, and excluding transaction-related costs as well as the amortisation of acquired intangibles.

"Importantly, Swedish Match's operating cash flow comprises meaningful US dollar net income, thereby improving PMI's currency profile," it added.

At 0920 BST, Swedish Match shares were up 9% at SEK 103.55.