Vectura board says it will unanimously back a Philip Morris takeover
Philip Morris is one step closer to taking over respiratory drugmaker Vectura, as the UK-based company’s board of directors says it will unanimously back the tobacco giant’s $1.5 billion bid.
The board said it considers Philip Morris’ offer “fair and reasonable,” according to a statement. The cigarette company, best known for its Marlboro products, offered 165 pence per share, beating out a 155 pence per share offer by the private equity firm The Carlyle Group.
The news comes days after The Carlyle Group insisted its most recent offer of $1.3 billion was final, refusing to get involved in a planned auction or go above what it concluded was a “full and fair” price for Vectura.
When The Carlyle Group first announced its buyout offer in May, it seemed to be a done deal, with the valuation marking a 32% premium over the company’s market value at the time. Vectura, which flopped as a drug developer, has flourished since pivoting to formulating inhaled drugs for clients.
Then Philip Morris put in an offer, as CEO Jacek Olczak pushed a “beyond nicotine” strategy that would position the company to generate more than half its revenue from smoke-free products by 2025.
But the move triggered backlash from consumer advocates, charities, anti-smoking groups and even the UK’s business secretary.
“Tobacco companies should not profit from the illnesses their products cause,” a group of representatives from more than 20 anti-smoking and lung health organizations wrote to Vectura’s board yesterday.
“In addition, we believe Vectura’s future commercial viability as a company dedicated to improving respiratory health would be seriously jeopardised should the PMI takeover proceed,” they added.
Those representatives included Bronwyn King, CEO of Tobacco Free Portfolios; Sarah Woolnough, chief executive of Asthma UK; and Kjeld Hansen, chair of the European Lung Foundation, among others.
The proposed PMI takeover of @VecturaGroup is unacceptable in every possible way. Along with representatives from more than 20 organisations, I wrote to the #Vectura Board today to urge them to reject the bid. They've decided to recommend, so now it's over to the shareholders.
— Sarah Woolnough (@swoolnough) August 12, 2021
The buyout still needs the approval of more than half of Vectura’s shareholders. But because Philip Morris switched its proposal to a takeover offer, there will be no shareholder meeting, according to the board’s statement. Instead, the offer will be open for at least 21 days, and PMI needs to get acceptance in the next 60 days, Reuters reported.
Brown Capital Management, a Baltimore firm, owns the largest stake in the company. Vanguard also holds a significant piece of the pie. But Axa Investment Managers, TIG Advisers and Berry Street Capital Management — which together hold about 11.2% of shares — had been in support of the Carlyle takeover, according to Reuters.