Shares in Swedish Match (SWMAF) soared 25% in mid-morning trade on Tuesday after US rival Philip Morris International (PM) said it was in talks to buy the Stockholm-based tobacco products company, betting on a growing market for alternatives to cigarettes.

The two companies in separate statements late on Monday confirmed media reports of the talks, saying it was uncertain whether an offer would be made.

Shares in Philip Morris, which is looking to expand its smoke-free options amid rising global scrutiny of the sale of traditional cigarettes, closed up 1% on Monday.

“The acquisition of Swedish Match, if confirmed, would be extremely well aligned with PM’s strategic goals and would have a reasonably straightforward route to regulatory approval,” said Alastair Mankin, vice president at brokerage Cowen.

“This wouldn’t be the case for Altria (MO) and BATS (BTI), the two companies with the scale to compete.”

Swedish Match generates the bulk of its profit from Swedish-style snuff called “snus” but its relatively new tobacco-free nicotine pouch product Zyn is growing fast in Scandinavia and the United States.

“Strategically, we think this makes a lot of sense,” analysts at Jefferies said in a note to clients. “It would give PMI a leading position in European smokeless, while critically, also giving distribution in the US for its own broader RRP (reduced-risk products) roll-out.”

The Jefferies analysts said they would not rule out a counter-bid for the Swedish group.

Swedish Match in March paused plans to spin off and list its US cigar business, its second-biggest segment after snus.