Moist powder tobacco "snus" cans are seen on shelves at a Swedish Match store in Stockholm
Moist powder tobacco "snus" cans are seen on shelves at a Swedish Match store in Stockholm, Sweden October 24, 2018. Reuters

Marlboro maker Philip Morris International Inc on Thursday raised its buyout offer for Swedish Match AB in a last-ditch effort to get shareholder support for its $16 billion move into the fast-growing market for alternatives to cigarettes.

Philip Morris increased its bid by more than 9% to 116 Swedish crowns per share and said that the offer was its "best and final price".

Swedish Match shares rose 1.5%, but were still 4 crowns short of the offer price, indicating that some investors were holding out for more as the total value of the new offer remained unchanged from the original one due to the appreciation in the U.S. currency against the Swedish krona.

DNB Markets analyst Jesper Ingildsen said some investors may also be waiting for EU antitrust approval, which Philip Morris expects in late October.

The revised bid comes as Philip Morris bought rights to sell its IQOS heated tobacco products in the United States from Altria Group Inc for $2.7 billion.

The company, which was spun off from Altria in 2008, has said it wants smoke-free products to account for more than half of sales by 2025.

Philip Morris made an all-cash offer of 106 crowns per share for Stockholm-based Swedish Match in May. Since then, the company has been under pressure to increase the offer as hedge funds, including Elliott Management Corp, have bolstered their stakes in Swedish Match in anticipation of a sweetened bid.

Bloomberg reported in July that Elliott, which raised its stake in Swedish Match to 7.25% from 5.5% in September, was planning to oppose the deal as it was not in favor of the offer terms, when the bid was first revealed.

A source told Reuters last month that Elliott was also considering taking a seat on the board of the Stockholm-based maker of Zyn nicotine pouches.

Elliott declined to comment on Philip Morris' revised offer.

John Hempton, co-founder of Sydney-based Bronte Capital that owns 1% of Swedish Match, said he was still not intending to accept the bid, despite the increased offer price

"It is wonderful news. Philip Morris has announced that they are not waiving the 90 percent acceptance condition. The deal will fail and Swedish Match will remain an independent company," Hempton said.

By Swedish law, 90% of Swedish Match shareholders need to approve the offer before Nov. 4.

Pontus Dackmo, CEO of Protean Funds who has 500,000 shares in Swedish Match, said he was still not impressed by Philip Morris' latest offer.

"Let's just say it's silly on an almost biblical scale not to neither compensate for the USD/SEK appreciation since the launch of the bid, nor the ongoing inflation," Dackmo said.

He, however, declined to comment on whether the fund would tender its shares in light of the increased offer.

Swedish Match did not immediately respond to a Reuters request for comment on the revised offer.

Illustration shows Philip Morris International logo
A woman poses with a cigarette in front of Philip Morris International logo in this illustration taken July 26, 2022. Reuters