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Philip Morris offers $16 bn for Swedish smokeless tobacco firm

Marlboro-maker Philip Morris International said on Wednesday that it had offered $16 billion to acquire smokeless tobacco company Swedish Match as the US group aims to move away from its traditional cigarette business.

Philip Morris offers $16 bn for Swedish smokeless tobacco firm
Photo: Janerik Henriksson/TT

The board of Swedish Match recommended that its shareholders accept the bid of 106 Swedish kronor per share, nearly 40 percent above its closing share price on Monday, the companies said in separate statements.

The deal would total 161.2 billion Swedish kronor (15 billion euros).

Stockholm-based Swedish Match derives more than 65 percent of its revenue from smoke-free products, including chewing tobacco and the Zyn brand of nicotine pouches.

Philip Morris announced in 2016 a long-term goal to stop selling cigarettes and replace them with alternatives that it says are less harmful.

The US company sells cigarette brands such as Marlboro and Chesterfield in 180 markets outside the United States and has invested billions of dollars since 2008 in vapor products, oral nicotine and other “reduced-risk” products.

Last year it clinched a controversial takeover of British breathing inhaler manufacturer Vectura, despite fierce opposition from health campaigners and medical groups.

The group plans to generate at least $1 billion in annual net revenues from nicotine-free products by 2025.

Philip Morris and Swedish Match had confirmed the takeover talks on Monday following a Wall Street Journal report.

“We are pleased to announce this exciting next step in Philip Morris International’s and Swedish Match’s trajectory toward a smoke-free future,” the US company’s chief executive, Jacek Olczak, said in a statement.

“Underpinned by compelling strategic and financial rationale, this combination would create a global smoke-free champion — strengthened by complementary geographic footprints, commercial capabilities and product portfolios — and open up significant platforms for growth in the US and internationally,” he said.

Swedish Match chairman Conny Karlsson told AFP that the deal was a “good offer” for shareholders.

“It’s great to have the chance to broaden the distribution of our products, which can compete with cigarettes,” Karlsson said.

Snus scandal

Swedish Match is also known for making cigars and “snus”, a form of snuff particular to Nordic countries.

The sale of snus, a moist powder tobacco originating from dry snuff, is illegal across the European Union, but Sweden has an exemption. It contains nicotine and comes in teabag-like pouches that are placed under the lip.

In 2012, Swedish Match said an associate to the EU’s then health commissioner had sought a 60-million-euro payment from the company to push for a proposed tobacco law that would lift the snus ban.

The firm filed a complaint with the European Anti-Fraud Office and the health commissioner, John Dalli, resigned from his post.

Dalli appeared in a Maltese court this year on charges of bribery and trading in influence over the lobbying scandal.

Swedish Match shares rose by almost nine percent to 103.50 kroner following the takeover bid.

Philip Morris, listed on the New York Stock Exchange, was up 0.6 percent to $99.47 in electronic trading before the stock market opened.

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SAS STRIKE

Direct talks raise hopes SAS strike can be avoided

Scandinavian airline SAS and the Swedish pilot union Swedish Air Line Pilots Association (SPF) are now in direct talks, without the help of mediators, raising hopes that a strike scheduled for Saturday can be avoided. 

Direct talks raise hopes SAS strike can be avoided

“It is a positive sign that they can talk directly,” said Jan Sjölin, the official mediator appointed by Sweden’s National Mediation Office (Medlingsinstitutet).

On June 9, the pilot unions of Sweden, Norway and Denmark submitted their notice to strike on June 29th, with the strike then postponed until July 1st, and then again until July 2nd. 

If negotiations do not succeed, 900 pilots could go on strike at midnight.

The fact that the mediators have now taken a step back should be seen as a step forward for the negotiations, according to Sjölin.  

“As mediators we try to get the parties to agree on the disputed issues,” he said. “If we see that they are able to handle the discussion better themselves, then we urge the parties to do so and sit down to try to come to an agreement.” 

Mediators from The National Mediation Office (Medlingsinstitutet), a Swedish government agency tasked with mediating in labour disputes, have been assisting the negotiations since June 13th.

Sjölin emphasises that in Sweden it is always preferable that the parties talk on their own.

“We task them to do so. And then we are on hand making sure that the process moves forward. As soon as they report that there is a wrench in the works, we strip everything down and give it a good oiling so it all runs smoothly,” he said.

Sjölin would not give his judgement of how likely it was that a strike would be avoided. 

“No, that is impossible. The nature of all negotiations is that nothing is done until everything is done. Even the last details can derail the whole deal,” he said.

The SAS management and SPF have been in intensive negotiations for several weeks on a new collective agreement.

The Swedish pilot union believes that SAS is circumventing the right to re-employment by using staff from two subsidiaries as temporary labourers. 

Some 560 pilots who were laid off during the pandemic have not been re-employed.

Karin Nyman, communications director at SAS, did not want to comment on the latest developments in the negotiations, but briefly summarised her company’s position.

“We are in an extremely difficult situation after this long pandemic. We are completely dependent on being able to implement our transformation plan. To do that, we need to radically reduce our costs and modernise our business. That requires great cost reduction. And we can not agree to conditions that are not in line with that,” said Nyman.

On the Norwegian side pressure is mounting on SAS. When asked by Norwegian newspaper Verdens Gang if they were prepared to let the company go bankrupt, the Norwegian pilot union issued a threat.

“Yes, without a doubt. If the company is unable to keep in line with the Scandinavian model, we believe that it is an actor that does not have the right to survive,” said Roger Klokset, leader of the union Norske SAS-flygeres forening (NSF).

According to Roger Klokset, the employees are pushed into a corner and have no other options. If the parties do not come to an agreement before midnight, the consequence may be that 900 pilots, among them 400 Norwegians, will go on strike.

“I can say that the last thing we want is for there to be a strike, but for us this fight is a matter of principle, and it is for fundamental labour rights for employees in the Nordic region, said Klokset.

The old collective agreement between the Scandinavian pilot union and SAS expired at the end of March. Negotiations between the unions and SAS have been ongoing since November of last year.

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