The joint venture, announced Tuesday, will be based in the Swedish capital Stockholm.
Both firms will hold an equal stake, PMI said in a statement released in Washington.
“The smoke-free category has demonstrated substantial growth in Sweden and Norway over a number of years” Swedish Match boss Lars Dahlgren said.
“We believe that smoke-free tobacco products, and especially Swedish Snus, have potential outside of their current markets.”
‘Snus’ tobacco is a moist snuff most commonly packaged in a small tea-bag-like pouch which is placed against the users’ gum. It is widely used in Scandinavia.
Swedish Match is a leading producer of matches, lighters, and snuff, with increased sales of the company’s snus varieties helping lift profits in recent months.
PMI said the promotion of the product could help offset concerns about the health risks of smoking tobacco.
Snus has been recognized by many in the scientific and public health community to be significantly less harmful than cigarette smoking,” the company said.
The sale of some non-smoked tobacco products has been banned in the European Union since 1992, except in Sweden, which won an exception from the rules when it joined the EU in 1995.
However, the EU has maintained a ban on Swedish snus exports to other member states, despite protests from Sweden’s Trade Minister Ewa Björling, who has vowed to have the export ban.
PMI is one of the world’s biggest tobacco producers. Present in 160 countries, it makes the Chesterfield and Marlboro brands.