The American tobacco company Philip Morris International (NYSE:PM) has reportedly won the support of famed hedge fund Elliott Investment Management LP for its bid to acquire Swedish Match AB (GB:0GO4). Notably, Elliott recently increased its stake in Swedish Match to 10.5% (from 7.25%).
On Friday, the Stockholm-based nicotine pouch maker disclosed that more than 80% of shareholders had voted in favor of the takeover, with the possibility of more being added on Monday. The initial agreement required that about 90% of Swedish Match shareholders approve the buyout, but the threshold may be reduced to 80% under the current circumstances as the bid has expired.
PMI sweetened its bid to buy Swedish Match last month, citing the strengthening of the U.S. Dollar. Hedge funds, including Elliott, were dissatisfied with PMI’s initial bid. The updated bid of roughly $15.8 billion (116 Swedish kroner per share) seems to have won the favor of the majority.
Through Swedish Match’s acquisition, PMI expects to gain a strong foothold in American alternative smoking products, including vaping devices, nicotine pouches, and heated tobacco. Also, it would help bolster PMI’s goal of earning about 50% of its revenue from smoke-free products by 2025.
Is PM Stock a Buy?
On TipRanks, PM stock has a Moderate Buy consensus rating. This is based on four Buys and two Hold ratings during the past three months. The average Philip Morris International stock prediction of $105 implies 16.7% upside potential to current levels. Meanwhile, the stock has lost 2.2% so far this year.
Moreover, Philip Morris pays a healthy quarterly common dividend of $1.27 per share, reflecting an impressive current yield of 5.58%.
