Philip Morris swoops for Vectura Group with £1bn bid

The 150p-a-share offer from the maker of Marlboro cigarettes trumps a 136p offer from private equity group Carlyle in May that valued Vectura, which focuses on inhaled medicines, at £958m.

Vectura, whose shares rose 13.22% to 153 pence, said it was withdrawing its recommendation for the Carlyle offer in favour of the Philip Morris bid and was adjourning a shareholder meeting scheduled for Monday.

“We recognise the material increase in the price offered to shareholders under the acquisition when compared with the Carlyle offer and have accordingly recommended the acquisition to shareholders,” said Vectura chairman Bruno Angelici.

“The acquisition will provide our people with the opportunity to form the backbone of an autonomous inhaled therapeutic business unit of PMI, helping develop products to improve patients’ lives and address unmet medical needs.”

Philip Morris said it was expanding into products beyond tobacco and nicotine “as part of a natural evolution into a broader healthcare and wellness company” with the ultimate aim of disrupting its own industry and ending smoking.

“The market for inhaled therapeutics is large and growing rapidly, with significant opportunities to address unmet needs,” said PMI chief executive Jacek Olczak.

“By joining forces and investing our resources in the continued scientific excellence of our two companies we can secure critical capabilities to accelerate our long-term growth in beyond nicotine products, which is a core strategic focus for PMI.”

The move follows Philip Morris’s $820m acquisition earlier this month of Fertin Pharma, a maker of nicotine chewing gum and oral drugs for pain. The company aims to generate more than half of its revenue from non-combustible products by 2025, as well as at least $1bn in sales outside nicotine.

“There seems to be an element of poacher turned gamekeeper for Philip Morris in this deal as it looks to use its expertise in inhalation for good – making Vectura’s inhaled drug delivery solutions a good fit," said Russ Mould, investment director at financial services platform AJ Bell.

“Vectura shareholders may be pleased this is an all-cash offer as many might have had ESG objections to being left with a position in a manufacturer of harmful cigarettes as opposed to a business working to improve people’s health.”