The board of Vectura Group PLC (AIM:VEC) found the lure of Philip Morris’s cash too much and is recommending shareholders accept the cigarettes maker’s 165p per share offer.
The offer is higher than the rival bid of 155p backed by private equity group Carlyle but if shareholders fall in line with the recommendation of the board it will result in a healthcare company that makes inhalers to treat lung disease being owned by a tobacco company.
Who says Americans don’t do irony?
Only in capitalism. Tobacco giant Philip Morris profited for decades from cigarettes that caused illness/death from inhaled smoke. Now it wants to buy drugmaker Vectura to profit from treating diseases including those its cigarettes worsened. https://t.co/XiiTQVpcY6
— Richard D. Wolff (@profwolff) August 12, 2021
The Vectura directors said they appreciate Carlyle's interest in Vectura over the lengthy bidding process – at various times the board recommended acceptance of offers from Philip Morris International Inc (NYSE:PM) (NYSE:PM) and Carlyle (both offers were subsequently raised) – and the private equity group’s support for Vectura's strategy to become one of the market-leading contract development and manufacturing organisation (CDMO) in the inhalation sector.
Cash conquers all in this case, however, and Carlyle has been asked to butt out and stand aside from Philip Morris International.
This is despite protests from health groups that speculated being owned by a tobacco company would deter scientists from working for Vectura, with a letter from groups including the Royal College of Physicians, Asthma UK and the British Lung Foundation warning the takeover would “seriously jeopardise” Vectura’s “future commercial viability as a company dedicated to improving respiratory health”.
The board and its advisors have plumped for the offer from Philip Morris, achieving in the process the hitherto unthinkable development of turning a private equity group into the guys wearing the white hats.
The proposed PMI takeover of @VecturaGroup is unacceptable in every possible way. Along with representatives from more than 20 organisations, I wrote to the #Vectura Board today to urge them to reject the bid. They've decided to recommend, so now it's over to the shareholders.
— Sarah Woolnough (@swoolnough) August 12, 2021
Respiratory drug group Vectura has backed a takeover by Philip Morris. Having previously acknowledged warnings that its ownership by a tobacco firm could harm Vectura’s prospects, the board of the drug maker has changed its tune and said it could benefit from Philip Morris! pic.twitter.com/KpH37ARvyT
— Ben Martin (@Benjaminwmartin) August 12, 2021
Shares in Vectura were unchanged this morning at 163.2p.