European Event-Driven Analyst

Jesus Rodriguez Aguilar

Event-Driven

<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.


<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

Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the December 2022 Rebalance.</li>
<li>There could be five M&amp;A-related intra-review deletions between now and the end of the year.</li>
<li>There could be more index changes in the December 2022 Rebalance too. </li>
</ul>


In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EuroSTOXX Indices for the December 2022 Rebalance.
There could be five M&amp;A-related intra-review deletions between now and the end of the year.
There could be more index changes in the December 2022 Rebalance too. 


STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race

<ul>
<li>In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the September 2022 Rebalance.</li>
<li>Based on current rankings, there could be around 11 ADDs/DELs in the September 2022 Rebalance.</li>
<li>The completion of the <a href="https://www.smartkarma.com/entities/avast-plc" target="_blank" data-smartkarma-citation="entities:33815:1" rel="noopener">Avast PLC (AVST LN)</a> and <a href="https://www.smartkarma.com/entities/meggitt-plc" target="_blank" data-smartkarma-citation="entities:22044:1" rel="noopener">Meggitt PLC (MGGT LN)</a> deals could result in intra-review changes in September 2022.</li>
</ul>


In this insight, we take a look at the names leading the race to become ADDs/DELs for the STOXX Europe 600 and EURO STOXX Indices for the September 2022 Rebalance.
Based on current rankings, there could be around 11 ADDs/DELs in the September 2022 Rebalance.
The completion of the Avast PLC (AVST LN) and Meggitt PLC (MGGT LN) deals could result in intra-review changes in September 2022.


STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More

<ul>
<li>Since Bloomberg reported that Elliot is amassing a stake, the shares have traded tight to terms, even rebasing the offer price. Uncertainty is growing around the deal.</li>
<li>The squeeze-out threshold is 90%, and reaching it seems increasingly difficult, in spite of a generous premium. Philip Morris could lower the acceptance threshold and/or extend the offer period.</li>
<li>My DCF valuation is SEK 113.17, potentially a 13% upside, although it would be difficult to twist Philip Morris's arm. I'd still be long just under the offer price.</li>
</ul>


Since Bloomberg reported that Elliot is amassing a stake, the shares have traded tight to terms, even rebasing the offer price. Uncertainty is growing around the deal.
The squeeze-out threshold is 90%, and reaching it seems increasingly difficult, in spite of a generous premium. Philip Morris could lower the acceptance threshold and/or extend the offer period.
My DCF valuation is SEK 113.17, potentially a 13% upside, although it would be difficult to twist Philip Morris's arm. I'd still be long just under the offer price.


Philip Morris/Swedish Match: Trading Tight to Terms

Sweden

Swedish Match develops, manufactures, and sells smokefree products, including snus, nicotine pouches, and moist snuff, as well as cigars, matches, and lighters. The company focuses on niche tobacco products and other related items. It is headquartered in Stockholm, Sweden, and was founded in 1915.

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Swedish Match (SWMA SS)

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/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

STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race

I expect ~12 ADDs/DELs in total for the STOXX Europe 600 index before the end of the year including intra-review changes and regular review...

Janaghan Jeyakumar, CFA

STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More

I see 11 ADDs/DELs based on current numbers but there are several other names that are only a small price change away from becoming ADDs/DELs

Janaghan Jeyakumar, CFA

Philip Morris/Swedish Match: Trading Tight to Terms

Since Bloomberg reported that Elliot is amassing a stake, the shares have traded tight to terms, even rebasing the offer price. Uncertainty is...

Jesus Rodriguez Aguilar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

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/​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

STOXX Europe Quiddity Leaderboard Dec 22: Five Intra-Review Changes, Porsche Leading The Race

I expect ~12 ADDs/DELs in total for the STOXX Europe 600 index before the end of the year including intra-review changes and regular review...

Janaghan Jeyakumar, CFA

STOXX Europe Quiddity Leaderboard Sep 2022: 11 ADDs/DELs, Sandvik-Alleima, and More

I see 11 ADDs/DELs based on current numbers but there are several other names that are only a small price change away from becoming ADDs/DELs

Janaghan Jeyakumar, CFA

Philip Morris/Swedish Match: Trading Tight to Terms

Since Bloomberg reported that Elliot is amassing a stake, the shares have traded tight to terms, even rebasing the offer price. Uncertainty is...

Jesus Rodriguez Aguilar

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