Philip Morris to buy Swedish Match South Africa

Philip Morris International Inc. said Thursday it has agreed to buy Swedish Match AB's South African operations for 1.75 billion South African rand, or roughly $222 million.

Swedish Match South Africa Ltd. reported sales of 687 million South African rand last year. Its brands include Boxer, Best Blend and Taxi.

Philip Morris estimated that Swedish Match South Africa's pipe tobacco and snuff products represent about 31 percent of total tobacco consumption in South Africa.

In a statement, Jean-Claude Kunz, president of Philip Morris' Eastern Europe, Middle East and Africa region, said the deal "represents an excellent strategic fit for our business in South Africa," which he called an "important market."

As cigarette demand falls, Philip Morris and other tobacco companies have focused on smokeless tobacco products and international markets to replace lost revenue.

In February, Philip Morris announced a 50-50 joint venture with Swedish Match to make and sell smokeless products like snus _ teabag-like pouches that users stick between their cheek and gum.

Philip Morris said it expects to complete the acquisition by the end of the fourth quarter, following approval by South African regulators. In a statement, Philip Morris predicted the deal will be "immediately marginally accretive" to its earnings per share.

Philip Morris, the world's largest non-governmental cigarette seller, separated from Altria Group Inc. in March 2008. It has offices in New York and Lausanne, Switzerland.

"This agreement with Philip Morris International is in line with Swedish Match's strategy to focus on smokefree tobacco, cigars and lights products," added Swedish Match President and CEO Lars Dahlgren in a statement.

Swedish Match South Africa will continue to distribute lighters, matches and cigars for Swedish Match, the company said.