8-KMaterial AgreementsRegulation FDExhibits & Filings

Philip Morris International Inc. 8-K Report, Material Agreement (Jul 7, 2021)

Filed July 7, 2021For Securities:PM

Summary

Philip Morris International Inc. (PM) has announced a significant strategic move through its wholly-owned subsidiary, PMI Global Services, Inc., to acquire Fertin Pharma A/S for an enterprise value of approximately USD 820 million. Fertin Pharma is a Denmark-based company specializing in the development and manufacturing of pharmaceutical and nutraceutical products, with a particular focus on oral and intra-oral delivery systems. This acquisition signals PM's continued diversification efforts beyond traditional tobacco products and into reduced-risk alternatives and adjacent health and wellness sectors. The transaction is subject to customary closing conditions, including antitrust and governmental approvals, with an expected closing around October 6, 2021. The agreement includes standard representations, warranties, and covenants, as well as non-compete and non-solicitation clauses for the sellers. This acquisition is a key step for Philip Morris International as it aims to transform its business model and expand its presence in the rapidly growing health and wellness market.

Key Highlights

  • 1PMI Global Services, Inc. is acquiring Fertin Pharma A/S for an enterprise value of DKK 5,121,500,000 (approx. USD 820 million).
  • 2Fertin Pharma specializes in pharmaceutical and nutraceutical products with oral and intra-oral delivery systems.
  • 3The acquisition aligns with PM's strategy of diversifying beyond traditional tobacco into health and wellness categories.
  • 4The transaction is expected to close on or around October 6, 2021, subject to regulatory approvals.
  • 5The agreement includes customary conditions, representations, warranties, and covenants, along with post-closing restrictions on sellers.
  • 6The deal involves standard indemnification obligations for sellers, with an emphasis on warranty and indemnity insurance.
  • 7PMI is actively pursuing growth in non-combustible product categories and reduced-risk alternatives.

Frequently Asked Questions

The acquisition of Fertin Pharma aligns with Philip Morris International's stated strategy to diversify its business and expand into adjacent health and wellness categories. Fertin Pharma's expertise in oral and intra-oral delivery systems for pharmaceutical and nutraceutical products offers PM an opportunity to leverage its scale and resources in a growing market segment, moving beyond its traditional tobacco product portfolio.

The agreement values Fertin Pharma at an enterprise value of approximately USD 820 million, subject to adjustments for net interest-bearing debt and normalized working capital as of March 31, 2021. The transaction is subject to regulatory approvals, with an expected closing around October 6, 2021. The agreement contains standard representations, warranties, covenants, indemnification provisions, and post-closing restrictions on the sellers, including non-compete and non-solicitation clauses.

The closing of the transaction is anticipated to occur on or around October 6, 2021. However, this is contingent upon the satisfaction of certain customary closing conditions, most notably the receipt of antitrust and other governmental approvals. The agreement allows for termination if closing does not occur by December 30, 2021, with a potential six-month extension if regulatory approvals are still pending.

This acquisition is a significant step in Philip Morris International's ambition to transform into a broader healthcare and wellness company. By acquiring Fertin Pharma, PM is enhancing its capabilities in product development and manufacturing within the health sector, particularly in delivery systems that can be applied to both pharmaceutical and potentially next-generation reduced-risk products. It represents a concrete move towards reducing reliance on traditional combustible cigarettes.