Philip Morris to pay $16B for Swedish Match before CT move

Two days after confirming it was in discussions with Swedish

Match, Philip Morris International announced Wednesday it reached a $16 billion deal to take over the tobacco company.

Philip Morris International is preparing to move its headquarters to Stamford from New York City. PMI, which has its European headquarters in Lausanne, Switzerland, will be among Connecticut’s largest companies.

It is by far the largest acquisition by PMI since it was spun off in 2008 from Altria Group’s predecessor company Philip Morris. And it is the second major acquisition this week with a Connecticut connection, after Pfizer announced an $11.6 billion deal to purchase Biohaven Pharmaceuticals in New Haven.

The acquisition supports PMI’s mission to become a “majority smoke-free” company.

The board of Swedish Match announced Wednesday it is recommending shareholders accept the offer, with the deal subject to that vote as well as approval by regulators.

Swedish Match sells cigars, nicotine pouches and smokeless tobacco, with Altria a major competitor via the Copenhagen and Skoal brands it picked up in its 2009 acquisition of UST based at the time in Stamford. Swedish Match also sells disposable lighters — its rivals on that front include Bic, which has its main U.S. office in

Shelton and a lighter manufacturing plant in Milford.

“Swedish Match has built an excellent smoke-free business with notable achievements toward a world without cigarettes,” Jacek Olczak, CEO of PMI, said Wednesday from prepared remarks during a conference call with investment analysts. “Over two-thirds of its revenues and around three-quarters of operating profits are from smoke-free products. This reflects strong positions in the U.S., which also makes up almost two-thirds of revenues and in Scandinavia.”

Under Olczak, PMI has been accelerating a push to reduce its reliance on cigarette sales, primarily to date through its IQOS devices that heat tobacco rather than burning it to deliver nicotine.

Smoke-free products accounted for 30 percent of PMI revenue in the first quarter of this year, Olczak said Wednesday, with the Swedish Match deal helping it toward its target of 50 percent by 2025.

“We believe nicotine pouches have the greatest harm-reduction potential of all smoke-free alternatives,” Olczak said. “Recognition of the part flavors can play, when responsibly marketed, in switching more adult smokers is also important. However, this must be combined with robust measures to help prevent underage and other unintended use of the products.”