Tobacco group Philip Morris wins control of inhaler company Vectura

Tobacco company Philip Morris International has taken control of the British inhaler company Vectura after winning over enough of its shareholders, despite concerns from health charities about the cigarette maker's ownership of a medical devices business.

Philip Morris said on Thursday it had secured 74.8 per cent of Vectura’s shares, making it the majority owner and its offer for the business unconditional.

The move was an "important milestone in our acquisition of Vectura", Philip Morris International (PMI) chief executive Jacek Olczak said, adding that the deal would "help us achieve our goal of generating at least $1 billion in net revenues from Beyond Nicotine products by 2025".

The owners of 45.6 per cent of Vectura’s shares accepted PMI’s £1 billion takeover offer. Separately, the tobacco company said it had bought 29.2 per cent of the company’s shares in the market.

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It needed just over 50 per cent for its offer to become unconditional, although 75 per cent is needed for the Chippenham-based company to be removed from the London Stock Exchange and taken private.

PMI said its offer had been extended, giving shareholders until September 30th to accept it.

PMI, which makes Marlboro cigarettes, outbid the US private equity firm Carlyle for control of Vectura, prompting complaints from healthcare charities that said Big Tobacco was an unsuitable owner of a healthcare business.

PMI has said it wants to shift its business away from cigarettes, with some saying the group should be encouraged to reinvent itself.

"Vectura has sold out millions of people with lung disease, and instead prioritised short-term financial gain over the long-term viability of Vectura as a business," said Sarah Woolnough, chief executive of Asthma UK and the British Lung Foundation.

“There’s now a very real risk that Vectura’s deal with Big Tobacco will lead to the cigarette industry wielding undue influence on UK health policy.”

A group of 35 academics and health specialists have asked public health minister Jo Churchill to consider whether the Competition and Markets Authority should intervene in the transaction. While the regulator usually considered monopolies, "they have not in this instance considered monopolies of harm", they said in a letter on Thursday.

Carlyle, which last year appointed former GlaxoSmithKline chief financial officer Simon Dingemans to oversee European healthcare deals, had kept its own offer on the table last month even after saying it would not outbid PMI on price, in the hope that investors may eventually back a lower-priced offer rather than sell to a tobacco group.

Vectura’s board had switched sides multiple times during a bidding war for the company. When Carlyle’s bid was the highest, it said the company “may be better positioned under Carlyle ownership to meet both [its] existing strategy, and the interests of a number of its current stakeholders”.

Days later, when PMI outbid Carlyle, it said “wider stakeholders could benefit from PMI’s significant financial resources”. – Copyright The Financial Times Limited 2021