Philip Morris switches Vectura scheme of arrangement to takeover offer

Philip Morris has switched its bid for London-listed inhaler maker Vectura to a takeover offer from a scheme of arrangement, which means the US tobacco giant will now require a lower level of shareholder approval.

PMI said it was switching to a takeover offer to increase the certainty of a deal. A scheme of arrangement requires 75% shareholder support, whereas a takeover offer only requires 50% under UK takeover rules.

On Monday, Vectura withdrew its intention to recommend a sweetened offer made by private equity firm Carlyle at the end of last week after an increased offer from PMI, as the UK Takeover Panel said the process would be put to auction if both suitors don’t make final bids by the end of the day on Tuesday.

On Sunday, PMI upped its offer for Vectura to 165p a share in cash - or £1.02bn - from 150p, after Carlyle said on Friday that it had increased its bid for Vectura to 155p a share, or £958m.

Vectura subsequently withdrew its recommendation for the PMI bid and said it would accept the offer from Carlyle. However, after the increased offer from PMI on Monday, Vectura withdrew its intention to recommend the Carlyle offer but did not recommend the offer from PMI in light of the what the Takeover Panel announced.

"The board will make a further announcement after the end of the auction, as set out in the auction rules, based on its fiduciary duties, consistent with its approach to date," it said.