SWMAY - Swedish Match: Good Q1 But Upside Capped By Philip Morris Offer
- We are downgrading our rating on Swedish Match as its shares now trade at just 5% below the SEK 106 offer from Philip Morris.
- We believe the offer undervalues Swedish Match's multi-bagger potential, but it has effectively been accepted by Swedish Match's board.
- Q1 results this week showed Swedish Match's strong growth continuing, with ZYN growing its volume by 35% and gaining share in the U.S.
- Other trade buyers are precluded by anti-trust or financial issues. Few private equity deals are large enough to launch a rival bid.
- There is a small possibility the bid will be raised, as 90% acceptance among shareholders is required, but we expect the offer to be accepted.
For further details see:
Swedish Match: Good Q1, But Upside Capped By Philip Morris Offer