Philip Morris International Inc. is in talks to buy Swedish Match AB, a maker of smokeless tobacco products, in a deal that would accelerate the Marlboro-maker’s push beyond cigarettes.

Swedish Match and Philip Morris International confirmed the discussions in statements Monday, saying talks are ongoing and there’s no certainty that an offer will be made. If the deal occurs, it would become one of the largest transatlantic transactions this year.

Discussions are advanced and an agreement could be announced in the coming days, according to people familiar with the process, who asked not to be identified as the details aren’t public. Swedish Match has a market valuation of about $11.5 billion and a deal could value the company at $15 billion, according to Bloomberg Intelligence analyst Kenneth Shea.

Shares of Philip Morris International, which sells the Marlboro brand outside the U.S., rose on the news in New York trading amid a broad decline in U.S. stocks. Swedish Match shares have advanced 4.7% this year in Stockholm trading.

Philip Morris has been at the forefront of the tobacco industry’s push to diversify beyond cigarettes as regulations become ever more restrictive globally. The company developed the IQOS heated-tobacco system and last year agreed to take over Vectura Group PLC, a developer of asthma drugs. It also acquired Fertin Pharma, which produces a smoking-cessation aid.

Oral nicotine

A deal would thrust Philip Morris into the growing field of oral nicotine products, many of which are very different from the chewing tobacco of the past, with pouch formats and a white color. Altria Group Inc., which separated from Philip Morris International in 2008 and sells Marlboro cigarettes in the U.S., has also pushed into the category with its On! brand, shipments of which doubled in the first quarter. Analysts say the space is highly competitive.

By acquiring Swedish Match, Philip Morris would gain a broader distribution network in the U.S. for its reduced-risk products, helping position it to bring IQOS or vape products to American consumers, Jefferies analyst Owen Bennett wrote in a research note. If the deal goes ahead, Bennett said it will be a competitive blow to Altria and British American Tobacco PLC, potentially putting an end to Altria’s agreement to market IQOS in the U.S. and giving the firm more incentive to take full control of vape maker Juul Labs Inc.

"We would also not rule out a counter-bid for Swedish Match,” Bennett said, calling Japan Tobacco Inc. the most likely potential suitor.

Snus and ZYN

Swedish Match, whose vision statement is "a world without cigarettes,” is a leading maker of snus — a smokeless tobacco product users place between their upper lip and gum, which is popular in Sweden but banned across much of the rest of Europe. It also makes ZYN nicotine pouches that are sold in the U.S.

The Stockholm-based company decided to suspend a planned spinoff of its U.S. cigar business in March amid heightened regulatory risk for the company. At the time, the company said it had been informed by the U.S. Food and Drug Administration that so-called substantial equivalence designations it applied for had been denied, affecting about 3% of the company’s 2021 cigar volume.

Such a listing would have ended the Swedish company’s manufacture of combustible tobacco products. It nevertheless enjoys strong brand recognition for products such as ZYN and leading market positions in the smokeless-product markets of the U.S. and Nordic region. Strong volume helped the company report fourth-quarter operating profit of 1.96 billion kronor (about ¥25.4 billion), which beat the average analyst estimate.

The smokeless category includes nicotine pouches and medical therapeutics. Swedish Match has been aggressively defending its position and has tried to shut down rival makers of nicotine pouches, though its case against closely held Dryft Sciences LLC failed. Kretek International Inc. sold the Drfyt nicotine pouch business in 2020 to BAT, which sells the pouches under the Velo brand. Swedish Match is appealing the ruling.

The Wall Street Journal earlier reported details of the talks.