Further reading | FinancialTimes


Tobacco is good, isn’t it? Put tobacco in it any hole and, in exchange for a shortened lifespan, it will ease slightly considering the Nasdaq’s 29.9% year-to-date decline.

A recurring theme around these parties for more than a decade is how the biggest cigarette makers could combine their disparate global markets, bolstering pricing power over a shrinking customer base due to preventable deaths. It was fun ! It was also unnecessary. The potential antitrust suits of BAT, PMI, Japan Tobacco, Altria and Imperial Brands never moved forward. So rather than spending a decade embroiled in territorial carvings and brand dis-synergies, the cigarette peddlers could really focus on their desperate rearguard actions against a craft beer industry involving drumming and a heated coil.

What we get instead is PMI getting ready to buy Swedish Match. The Stockholm-based company has long been a leader in smokeless nicotine, selling it in small upper-lip hamster pouches. mark this stuff Zyn helped grow the snus market beyond Scandinavia – two-year US CAGR in volume of 51% according to Nielsen – and made Swedish Match the only growth stock in a dismal commodity sector. The offer price announced by PMI of 14.8 billion dollars represents almost 16 times the EBITDA; Tobacco mergers and acquisitions tend to be priced at 12ish.

It should be noted, however, that Swedish Match traded well below its historical average, with a premium of only 25% compared to its peers. And since Zyn demand has shown no signs of slowing down, there’s no particular reason for it beyond multiple compression. Chart via JP Morgan:

What we have here, in the year’s undifferentiated shift from growth to value, is a relative winner acquiring a relative loser. Perhaps.

Elsewhere on Tuesday. . .

– from America great job failureand how to end it

– The therapy bubble

– We all get bad energy

– Finance supply chain vulnerabilities

– What is stock market point?

— American banker on DeFi

— An inventory of the nation UK science and innovation policy

— America will regret its rush to legalize sports betting

—Michael Owen financial alchemist

— A delicious guided tour of the bowels of a mechanical watch


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