Goldman Sachs Group Inc. is set to earn around $50 million in fees on the sale of tobacco company Swedish Match AB, people familiar with the matter said, a welcome windfall at a time when investment banks are grappling with slowing deal activity.
The payout is poised to be one of the largest this year for mergers and acquisitions advisers working on a deal for a European target, the people said, asking not to be identified because the matter is private. Goldman Sachs was sole financial adviser to Swedish Match, which also makes smokeless nicotine pouches, on its $16 billion sale to Philip Morris International Inc. announced last week.
Citigroup Inc. and Bank of America Corp., which jointly advised Philip Morris, also stand to make tens of millions of dollars in fees from the deal, the people said. In addition to advising Philip Morris on the acquisition, the two banks are committing about $8 billion apiece for a bridge loan to finance the purchase, the people said.
Goldman Sachs was able to parlay a smaller role with Stockholm-based Swedish Match, leading a stalled plan to spin off its cigar business, into a wider mandate on the sale of the entire company. The payday comes at a time when Russia’s war in Ukraine, volatile financial markets and rising inflation threaten to end last year’s record-breaking deal spree.
Takeovers of European companies are down 25% this year, according to data compiled by Bloomberg. Fundraising from initial public offerings on European exchanges has plunged 87%, while bond sales in Europe have fallen 16%.
Representatives for Swedish Match, Philip Morris and the banks declined to comment.
Goldman Sachs is the No. 1 adviser on M&A deals globally this year, having worked on transactions including Microsoft Corp.’s $69 billion acquisition of Activision Blizzard Inc. and the potential $44 billion takeover of Twitter Inc. by Elon Musk. In Europe, the bank is advising a Blackstone Inc.-led consortium on the takeover of Italian highway operator Atlantia SpA.
Swedish Match will help Philip Morris establish a distribution network in the US, the world’s largest market for smoking alternatives, paving the way for the rollout of other products such as vaping devices. It’s a big step by the maker of Marlboros after its 2008 spinoff from Altria Group Inc., coming as it exits Russia and expands in smoke-free products.
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