European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<ul>
<li>PMI has obtained acceptances of 82.59%, waives the 90% acceptance condition and extends the acceptance period until 25 November (settlement on 2 December).</li>
<li>SWMA shares are trading at an all-time high of SEK 115.8. Gross spread is 0.17% (estimated annual return is 2.52%). The market discounts that the offer will be successful.</li>
<li>Done deal. PMI is ready to wait until claiming final victory, quite possibly in the further extended acceptance period. It should be able to squeeze-out and delist. <strong>Accept offer</strong>.</li>
</ul>


PMI has obtained acceptances of 82.59%, waives the 90% acceptance condition and extends the acceptance period until 25 November (settlement on 2 December).
SWMA shares are trading at an all-time high of SEK 115.8. Gross spread is 0.17% (estimated annual return is 2.52%). The market discounts that the offer will be successful.
Done deal. PMI is ready to wait until claiming final victory, quite possibly in the further extended acceptance period. It should be able to squeeze-out and delist. Accept offer.


<ul>
<li>4 November was the deadline to tender. PMI threatened to walk away if it didn't reach 90%. Some funds that opposed the deal trimmed their stakes, likely bought by arbs.</li>
<li>The FT has reported that Elliot (10.5% stake) has tendered and that by 4 November over 80% acceptances were recorded. PMI is very likely to reach now over 90% acceptances.</li>
<li>Results will be announced on 7 November, with settlement on 11 November. The squeeze-out procedure is likely be initialed as soon as possible after settlement. Gross spread is 0.87%.</li>
</ul>


4 November was the deadline to tender. PMI threatened to walk away if it didn't reach 90%. Some funds that opposed the deal trimmed their stakes, likely bought by arbs.
The FT has reported that Elliot (10.5% stake) has tendered and that by 4 November over 80% acceptances were recorded. PMI is very likely to reach now over 90% acceptances.
Results will be announced on 7 November, with settlement on 11 November. The squeeze-out procedure is likely be initialed as soon as possible after settlement. Gross spread is 0.87%.


<ul>
<li>PMI increased the offer price by 9.4% to SEK 116/share to overcome the resistance of shareholders. PMI warns it is its final offer and keeps the 90% minimum acceptance condition.</li>
<li>The revised offer represents an implied equity value of SEK 176.4 billion (USD15.8 billion, vs. USD16 billion last May) and 17.1x EV/NTM EBITDAe (vs. 17.5x in May).</li>
<li>Swedish Match is trading at SEK 112.5, c. 3.1% discount to the revised offer (settlement estimated on 11 November). The market believes the sweetened offer is final. Long &amp; tender.</li>
</ul>


PMI increased the offer price by 9.4% to SEK 116/share to overcome the resistance of shareholders. PMI warns it is its final offer and keeps the 90% minimum acceptance condition.
The revised offer represents an implied equity value of SEK 176.4 billion (USD15.8 billion, vs. USD16 billion last May) and 17.1x EV/NTM EBITDAe (vs. 17.5x in May).
Swedish Match is trading at SEK 112.5, c. 3.1% discount to the revised offer (settlement estimated on 11 November). The market believes the sweetened offer is final. Long &amp; tender.


Independent research on the U.S. markets, Baptista Research

Baptista Research

Independent research on the U.S. markets

Baptista Research is an independent financial research house focused on the U.S. markets. We provide equity research as well as credit research reports on the top-listed U.S. companies with most of our focus on technology, consumer goods and services, automobiles, industrials, oil and gas, pharma, and healthcare. Our research has served more than 3000 institutional investors including mutual funds, hedge funds, banks, family offices, and various buy-side firms. We operate a research subscription service where institutions, as well as retail investors, can have priority access to all our research. We also have a wide distribution of our research reports across some of the top global financial platforms. Apart from equity research and credit research, we also provide advisory services with respect to mergers & acquisitions (M&A), private equity/ venture capital fundraising, valuation reports, and investment management services for corporates.
Baptista Research is owned and managed by Ishan Majumdar, an ex-Venture Capitalist/ Investment Banker, a Chartered Accountant, and a Masters’ degree holder in Management from HEC Paris. Ishan has nearly a decade of experience in Mergers and Acquisitions, Leveraged Buyouts (LBOs), Venture Capital Investing, Corporate Strategy, and Valuation in front-office roles at the likes of BNP Paribas CIB, Credit Agricole CIB, Groupe Danone, and TIW Private Equity. He has worked on and closed multiple acquisition deals, leveraged buyouts, and start-up investment transactions.

Equity Bottom-Up

Philip Morris International / Equity Bottom-Up

<ul><li>Philip Morris continued to demonstrate a strong underlying momentum with positive volume that supported a better than expected top-line growth in the last quarter.</li><li>The company delivered yet another all-around beat as net revenues of pro forma grew organically, which reflects continued strong growth in IQOS as well as the ongoing recovery of combustible business in various markets.</li><li>Strong quarter pro forma user growth and continued excellent IQOS performance were very impressive.</li></ul>

Philip Morris continued to demonstrate a strong underlying momentum with positive volume that supported a better than expected top-line growth in the last quarter.The company delivered yet another all-around beat as net revenues of pro forma grew organically, which reflects continued strong growth in IQOS as well as the ongoing recovery of combustible business in various markets.Strong quarter pro forma user growth and continued excellent IQOS performance were very impressive.

Philip Morris International: Expansion In The Philippines

<ul>
<li>Activist investors are pushing for an up to 30% increase over the SEK106/share offer price. Already in the second extension of offer period, only 0.51% of shares has been tendered.</li>
<li>PMI has a strong balance sheet, which combined with stronger results from both companies and FX favorable moves, would allow for that 30% premium (proforma 3.0x net leverage).</li>
<li>Gross spread is +4.1%. It seems difficult that PMI could succeed without sweetening the offer price, therefore I'd be long Swedish Match. The bidding contest for Vectura shows a precedent.</li>
</ul>


Activist investors are pushing for an up to 30% increase over the SEK106/share offer price. Already in the second extension of offer period, only 0.51% of shares has been tendered.
PMI has a strong balance sheet, which combined with stronger results from both companies and FX favorable moves, would allow for that 30% premium (proforma 3.0x net leverage).
Gross spread is +4.1%. It seems difficult that PMI could succeed without sweetening the offer price, therefore I'd be long Swedish Match. The bidding contest for Vectura shows a precedent.


Philip Morris/​Swedish Match: The Case for an Offer Sweetening

United States

Philip Morris International Inc., through its subsidiaries, affiliates and their licensees, produces, sells, distributes, and markets a wide range of branded cigarettes and tobacco products in markets outside of the United States of America.  The Company's portfolio comprises both international and local brands.

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Philip Morris International (PM US)

Offer Becomes Unconditional

PMI has obtained acceptances of 82.59%, waives the 90% acceptance condition and extends the acceptance period until 25 November (settlement on 2...

Jesus Rodriguez Aguilar

Elliot Tenders Its Stake

The FT reported that Elliott Management had decided to tender its stake. This means that PMI should get very close to the 90% threshold to initiate...

Jesus Rodriguez Aguilar

Will Philip Morris Succeed Now?

Swedish Match is trading at SEK 112.5, a c. 3.1% discount to the revised offer (settlement is estimated on 11 November). This seems to imply that...

Jesus Rodriguez Aguilar

Philip Morris International: Expansion In The Philippines

Philip Morris continued to demonstrate a strong underlying momentum with positive volume that supported a better than expected top-line growth in...

Baptista Research

Philip Morris/Swedish Match: The Case for an Offer Sweetening

It seems difficult that PMI could succeed without sweetening the offer price. At this point, I would be long Swedish Match. An offer sweetening...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Offer Becomes Unconditional

PMI has obtained acceptances of 82.59%, waives the 90% acceptance condition and extends the acceptance period until 25 November (settlement on 2...

Jesus Rodriguez Aguilar

Elliot Tenders Its Stake

The FT reported that Elliott Management had decided to tender its stake. This means that PMI should get very close to the 90% threshold to initiate...

Jesus Rodriguez Aguilar

Will Philip Morris Succeed Now?

Swedish Match is trading at SEK 112.5, a c. 3.1% discount to the revised offer (settlement is estimated on 11 November). This seems to imply that...

Jesus Rodriguez Aguilar

Philip Morris International: Expansion In The Philippines

Philip Morris continued to demonstrate a strong underlying momentum with positive volume that supported a better than expected top-line growth in...

Baptista Research

Philip Morris/​Swedish Match: The Case for an Offer Sweetening

It seems difficult that PMI could succeed without sweetening the offer price. At this point, I would be long Swedish Match. An offer sweetening...

Jesus Rodriguez Aguilar

Philip Morris/Swedish Match: The Case for an Offer Sweetening