Philip Morris International is nearing a deal to acquire European rival Swedish Match for about $16bn including debt, as the tobacco group bets on the rapidly growing market for cigarette alternatives.

A deal could be announced in the next few days and would mark PMI’s biggest consolidation move since abortive merger talks with Altria in 2019, according to people close to the discussions.

Swedish Match and PMI both put out statements confirming the takeover talks on Monday afternoon, saying there could be no certainty that an offer would be made.

The Stockholm-based tobacco group is a leader in so-called snus, or oral nicotine pouches, that originated in Sweden but have in recent years grown increasingly popular outside the Scandinavian countries.

Swedish Match said sales of the product grew more than 50 per cent last year in the US and Scandinavia.

Analysts at Bernstein said there was a “high probability” the deal would close, citing a history of close collaboration between the two companies including a joint venture for snus outside of Scandinavia.

Best known for selling Marlboro outside the US, PMI has emerged as the most aggressive company in an industry that is scrambling to gain market share in so-called new-generation products, including vapes and heated tobacco devices, which are pitched as being less harmful than combustible cigarettes.

Chief executive Jacek Olczak, who took over the reins of PMI last May, has committed the company to a diversification strategy that is more radical than most of its peers.

Olczak’s promise to “unsmoke the world” has been met with scepticism, especially when PMI last year struck a £1bn deal to buy Vectura, a UK-based developer of asthma inhalers. Since 2008, PMI has invested roughly $8bn in supporting its strategy for smoke-free products.

New York-listed shares in PMI have outperformed the broader S&P 500 and are one of a rare batch of large-cap stocks that are up on the year. PMI shares were up 2.2 per cent in afternoon trading in New York, giving the group a market value of more than $156bn.

Shares in Swedish Match are also up for the year. It has a market value of SKr116bn ($11.5bn). It has net debt of $1.3bn. 

The Wall Street Journal first reported on the talks.

PMI traces its roots to 2008 when US-based Altria decided to spin off its international business. The two companies called off talks to reunite three years ago, with one sticking point being Altria’s stake in Juul, the vaping company that has come under regulatory scrutiny for its appeal among teenagers.

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