Carlyle Raises Offer for Vectura, Elbowing Out Philip Morris
(Bloomberg) -- Carlyle Group Inc. raised its offer for Vectura Group Plc to about 958 million pounds ($1.33 billion) as the takeover battle for the U.K. drugmaker heats up.
The private equity firm bid 155 pence in cash for each Vectura share, according to a statement from Carlyle Friday. That’s up from the previous offer of 136 pence and a 19-pence cash dividend for each Vectura share, and also tops a rival one from Philip Morris International Inc. of 150 pence a share.
Vectura said Carlyle’s new offer is superior to Philip Morris’s on price and timing and is “well aligned with Vectura’s wider stakeholder objectives.” The company withdrew its recommendation of the Philip Morris offer.
A spokesman for Philip Morris declined to comment immediately.
Carlyle had struck an agreement to buy Wiltshire, England-based Vectura in May until cigarette-maker Philip Morris emerged with its offer in July. Vectura, founded in 1997, makes inhalers and nebulizers, which enable patients to breathe in medication as a mist, either through a mouthpiece or a mask. Its customers have included Novartis AG and GlaxoSmithKline Plc.
Carlyle aims to speed Vectura’s expansion as the company transforms into a maker of inhaled therapies for others in the industry. Vectura is working on a Covid-19 medicine, among other treatments.
Carlyle said 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% of the issued ordinary shares.
The U-turn is a blow for Philip Morris. As an increasing number of people across the developed world quit smoking, the Marlboro maker is focusing its investments on IQOS heated-tobacco devices and expanding into non-tobacco businesses.
Chief Executive Officer Jacek Olczak had counted on Vectura to help Philip Morris achieve its goal of at least $1 billion in sales outside nicotine by 2025. Its $820 million acquisition of Fertin Pharma, a maker of nicotine chewing gum and oral drugs for pain, gives the company expertise in oral deliveries, but it will take Philip Morris longer to develop inhaled therapies without Vectura.
The prospect of Big Tobacco owning a company that makes products that treat many of the illnesses caused by cigarettes had raised concerns in a number of quarters. The Vectura directors on Friday acknowledged reports of uncertainties relating to the possible impact on Vectura stakeholders if the company were owned by Philip Morris.
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