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Philip Morris International operation centre, in Lausanne, Switzerland, on Aug. 19, 2009.Denis Balibouse/Reuters

Marlboro maker Philip Morris International Inc PM-N on Thursday raised its buyout bid for Swedish Match AB in a last-ditch effort to get backing for its $16-billion offer that has been met with shareholder opposition.

Although Philip Morris raised its bid by more than 9 per cent to 116 Swedish crowns per share and called its “best and final price,” some Swedish Match shareholders seem to be holding out for more.

Their concern is that the total value of the new offer is little changed from the original bid due to the appreciation in the U.S. currency against the Swedish krona.

“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,” said Pontus Dackmo, chief executive of Protean Funds who has 500,000 shares in Swedish Match.

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

In May, Philip Morris made an all-cash offer of 106 crowns per share for Stockholm-based Swedish Match. 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 per cent from 5.5 per cent in September, was planning to oppose the deal as it was not in favour 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.

Swedish Match and Elliott declined to comment on Philip Morris’ revised offer.

John Hempton, co-founder of Sydney-based Bronte Capital that owns 1 per cent 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 per cent acceptance condition. The deal will fail and Swedish Match will remain an independent company,” Hempton said.

By Swedish law, 90 per cent of Swedish Match shareholders need to approve the offer before Nov. 4. Philip Morris said on Thursday that it still stood firmly on the 90 per cent acceptance rate.

“We do not think this will be enough,” Jefferies analyst Owen Bennett said, adding that he expects Philip Morris to lower the 90 per cent acceptance condition in the next few weeks.

The revised bid also 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 wanted smoke-free products to account for more than half of its sales by 2025.

Shares of Swedish Match rose about 2 per cent, but were still nearly 4 crowns short of the offer price, while Philip Morris’ stock was down marginally.

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