Phillip Morris (PM) stock raises price for Swedish Match takeover
- Philip Morris has raised its takeover price for Swedish Match by 9%.
- PM stock is steady after the cigarette maker posts Q3 earnings beat.
- Philip Morris will buy electronic heated tobacco unit from Altria for $2.7 billion.
Phillip Morris International (PM) has raised its buyout offer for Swedish Match (SWMA), according to a report from The Wall Street Journal that was released as Thursday's session opened. The global tobacco purveyor has raised its price from 106 Swedish kronor back in May to 116 kronor per share.
PM shares are off 0.3% at $86.23 in the first half hour of trading.
Philllip Morris International stock news
Phillip Morris executives admitted the move was partially in response to the Swedish kroner losing so much value compared to the US dollar, as well as inflation. Even Philip Morris is offering 9.4% more Swedish Kroner, the new deal is worth about $15.7 billion rather than the $16 billion offered in May. The currency has falled from about $0.10 to today's price of $0.8934 since May.
The Journal's report says that hedge fund Elliot Management has been pushing Philip Morris to sweeten the offer for months. Phillip Morris management has been adamant that it will not raise this, its final offer, for the Stockholm-based tobacco manufacturer.
Separately, Phillip Morris has also announced that it will pay $2.7 billion to buy the US rights to IQOS from Altria (MO). IQOS products are the heated tobacco devices that Philip Morris invented. Philip Morris and Altria used to be one company before Altria became a spin-off focused on marketing to the US market specifically. Altria marketed the IQOS product in the US between 2019 and 2021 but was forced to curtail sales due to a lawsuit over intellectual property.
The news of its acquisition and acquisition offer has pushed Phillip Morris' earnings below the fold. Third-quarter earnings released well before the opening bell was quite good. The company produced adjusted earnings per share of $1.53, which was 17 cents ahead of consensus. Sales of $8.03 billion were also about $730 million ahead of the analyst average. Management said that without the strong dollar, 2022 EPS would have grown by 10% to 12%. In the real world, however, the strong dollar has led management to cut guidance. Instead of full-year expectations of diluted EPS of $5.73 to $5.88, management is now guiding for a range between $5.47 to $5.62.
Philip Morris stock forecast
In the previous two weeks, PM stock has found resistance at $88 or just below. This has made a rebound all but impossible from the largescale fall that took place in late September. This October rally seems to be going nowhere. If it does materialize (as the Moving Average Convergence Divergence indicator is not too far from being oversold), then PM stock would likely make a run at the 8-week moving average near $89 or the 30-week moving average near $97. That latter obstacle needs to fall before PM stock can rise above the nearby descending top trendline and mark a new bullish season. Until then, support from the winter of 2020 sits at $79.
PM weekly stock chart
Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
