European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<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

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 Capital Markets

Philip Morris International / Equity Capital Markets

<ul><li>Philip Morris had a decent first quarter of 2022 with double-digit organic net revenue growth excluding the Russia and Ukraine performance.</li><li>The company’s IQOS business had a strong quarter, continuing the reacceleration seen in the previous quarter as device supply constraints eased.</li><li>Philip Morris’ organic net revenue increased by 9% in total and 10% on a pro forma basis.</li></ul>

Philip Morris had a decent first quarter of 2022 with double-digit organic net revenue growth excluding the Russia and Ukraine performance.The company’s IQOS business had a strong quarter, continuing the reacceleration seen in the previous quarter as device supply constraints eased.Philip Morris’ organic net revenue increased by 9% in total and 10% on a pro forma basis.

Philip Morris International Inc.: The Russia Setback & Other Developments

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

Trudence Capital Advisors

Trudence Capital Advisors Private Limited is a SEBI-registered Research Analyst, holding SEBI registration number INH000015747. Our firm is dedicated to providing independent and unbiased research on Indian mid to large-cap companies. Trudence Capital is known for its counter-consensus views, with a focus on forensic research and on-ground primary investigations. Our research approach is thorough, involving detailed analysis of accounting practices and governance, alongside extensive channel checks.

Independent & Unbiased Research

Equity Bottom-Up

<ul>
<li>Our checks primary done over North of India suggest a stable to improving rural environment </li>
<li>There is a sense of aggression in <a href="https://www.smartkarma.com/entities/itc-ltd" target="_blank" data-smartkarma-citation="entities:327:1" rel="noopener">ITC Ltd (ITC IN)</a>, <a href="https://www.smartkarma.com/entities/britannia-industries-ltd" target="_blank" data-smartkarma-citation="entities:16495:1" rel="noopener">Britannia Industries (BRIT IN)</a> is well placed to grow volumes &amp; <a href="https://www.smartkarma.com/entities/nestle-india-ltd" target="_blank" data-smartkarma-citation="entities:13101:1" rel="noopener">Nestle India (NEST IN)</a> is expected to be a steady performer. </li>
<li>
<a href="https://www.smartkarma.com/entities/dabur-india-ltd" target="_blank" data-smartkarma-citation="entities:242:1" rel="noopener">Dabur India Ltd (DABUR IN)'</a> s image at the distributor level is quite shocking and <a href="https://www.smartkarma.com/entities/marico-ltd" target="_blank" data-smartkarma-citation="entities:16903:1" rel="noopener">Marico Ltd (MRCO IN)</a>'s products are more prone to volatility. </li>
</ul>


Our checks primary done over North of India suggest a stable to improving rural environment 
There is a sense of aggression in ITC Ltd (ITC IN), Britannia Industries (BRIT IN) is well placed to grow volumes &amp; Nestle India (NEST IN) is expected to be a steady performer. 

Dabur India Ltd (DABUR IN)' s image at the distributor level is quite shocking and Marico Ltd (MRCO IN)'s products are more prone to volatility. 


India Channel Insight #35 | ITC, Britannia, Nestle India, Dabur, Marico

<ul>
<li>PMI is making a recommended cash offer for the Swedish Match at SEK106/share, valuing it at SEK161.2 billion ($16 billion), 39% premium, 17.5x EV/Fwd EBITDA and 23.1x Fwd P/E.</li>
<li>Swedish Match is strategic for PMI and a valuable asset amidst big tobacco diversification drive. Some shareholders make this point to try to extract a higher price.</li>
<li>As of close of 12 May, gross spread is 3.3%, an interesting 8.7% annualised (assuming settlement by 7 October). The risk of not completing the offer seems low.</li>
</ul>


PMI is making a recommended cash offer for the Swedish Match at SEK106/share, valuing it at SEK161.2 billion ($16 billion), 39% premium, 17.5x EV/Fwd EBITDA and 23.1x Fwd P/E.
Swedish Match is strategic for PMI and a valuable asset amidst big tobacco diversification drive. Some shareholders make this point to try to extract a higher price.
As of close of 12 May, gross spread is 3.3%, an interesting 8.7% annualised (assuming settlement by 7 October). The risk of not completing the offer seems low.


Swedish Match Set Alight by Philip Morris

Credit

<ul><li>Philip Morris essentially operates in a slowing tobacco industry but its strong brands and market position have continued to inspire growth.</li><li>The company set new highs in net revenues, earnings, and cash flows in the year driven by increased overall volumes as a result of strong organic growth.</li><li>Based on our credit analysis, the company merits a Credit Evaluation Score of A with a stable outlook and as per our Financial Strength Indicator, its performance is 4.00/ 5.</li></ul>

Philip Morris essentially operates in a slowing tobacco industry but its strong brands and market position have continued to inspire growth.The company set new highs in net revenues, earnings, and cash flows in the year driven by increased overall volumes as a result of strong organic growth.Based on our credit analysis, the company merits a Credit Evaluation Score of A with a stable outlook and as per our Financial Strength Indicator, its performance is 4.00/ 5.

Philip Morris International: Detailed Credit Analysis & Financial Strength Evaluation Report

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Philip Morris International (PM US)

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 International Inc.: The Russia Setback & Other Developments

Philip Morris had a decent first quarter of 2022 with double-digit organic net revenue growth excluding the Russia and Ukraine performance. The...

Baptista Research

India Channel Insight #35 | ITC, Britannia, Nestle India, Dabur, Marico

This channel insight shares key takeaways from speaking to channels across north India that are associated with ITC, Britannia, Nestle India,...

Pranav Bhavsar

Swedish Match Set Alight by Philip Morris

Although the offer price seems fair, SWMA is a strategic acquisition for PMI, which could hike the offer price if challenged by a counteroffer or...

Jesus Rodriguez Aguilar

Philip Morris International: Detailed Credit Analysis & Financial Strength Evaluation Report

Philip Morris essentially operates in a slowing tobacco industry but its strong brands and market position have continued to inspire growth. The...

Baptista Research

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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 International Inc.: The Russia Setback & Other Developments

Philip Morris had a decent first quarter of 2022 with double-digit organic net revenue growth excluding the Russia and Ukraine performance. The...

Baptista Research

India Channel Insight #35 | ITC, Britannia, Nestle India, Dabur, Marico

This channel insight shares key takeaways from speaking to channels across north India that are associated with ITC, Britannia, Nestle India,...

Pranav Bhavsar

Swedish Match Set Alight by Philip Morris

Although the offer price seems fair, SWMA is a strategic acquisition for PMI, which could hike the offer price if challenged by a counteroffer or...

Jesus Rodriguez Aguilar

Philip Morris International: Detailed Credit Analysis & Financial Strength Evaluation Report

Philip Morris essentially operates in a slowing tobacco industry but its strong brands and market position have continued to inspire growth. The...

Baptista Research

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