Philip Morris International lowered the threshold of shareholder backing needed to succeed with its bid for Vectura as it faces off with Carlyle in a rare auction for control of the British asthma drug-maker.
By switching to what’s known under UK rules as a takeover offer from a scheme of arrangement, Philip Morris will need just over 50 per cent of shareholder acceptances instead of 75 per cent. The Marlboro-maker made the move to improve its chances of sealing the acquisition, it said on Tuesday.
Questions have been raised by medical bodies and health charities about whether it is ethically appropriate for a big tobacco company to own a pharmaceutical firm, especially one that makes drugs to treat illnesses caused by smoking. Carlyle said last week it had already secured the backing of investors holding about 11 per cent of Vectura.
The auction between the cigarette-maker and the US buyout firm kicks off after the close of trading on Tuesday, and could last until August 17th. It will determine how much each company is willing to pay for Vectura. However, the highest bidder will not necessarily win the day as shareholders will have the final word.
Philip Morris on Sunday offered 165 pence a share for Vectura, following Carlyle’s Friday bid of 155 pence. The stock rose as much as 1.2 per cent to 175 pence in London on Tuesday and has risen 40 per cent this year.
While Vectura has withdrawn its recommendation for the Carlyle offer made on August 6th, the company had described it as “well aligned” with its wider stakeholder objectives. It also took note of reports of the possible impact on stakeholders if the company were owned by Philip Morris.
For its part, Philip Morris is counting on Vectura to accelerate its transformation into a company less focused on cigarettes and nicotine. Vectura’s expertise will help it develop new products in inhaled therapies faster.
Separately, Philip Morris on Monday announced the purchase of OtiTopic, a US respiratory drug developer with an inhalable aspirin treatment for heart attacks in late-stage trials.
Undertakings
Carlyle said at the time of its most recent offer that it has received “irrevocable undertakings in relation to voting in favour” of the acquisition from Vectura shareholders Axa Investment Managers UK, TIG Advisors and Berry Street Capital Management. They represent about 11 per cent of the issued ordinary shares.
All parties have agreed to the terms of the auction which will last as many as five business days. Takeover auctions are rare in the UK and the most recent example was earlier in the year during the bidding war for UK security firm G4S between suitors Allied Universal Security Services and Garda World Security.
In 2018, Comcast won the bidding for Sky via an auction process with a $39 billion offer for Europe’s largest satellite broadcaster, staving off rivals 21st Century Fox and Walt Disney. – Bloomberg
