Marlboro maker swoops on UK health firm: Philip Morris in £1bn takeover by of inhaler group Vectura
Marlboro-maker Philip Morris International has swooped on British inhaler firm Vectura in an audacious £1billion takeover.
The world’s largest tobacco group said the move on the FTSE 250 outfit was part of its long-term strategy to rebrand as a ‘wellness company’.
But it is another setback for UK plc and the latest example of pandemic plundering that has seen innovative British companies become the targets of overseas vultures.
Philip Morris, the world’s largest tobacco group said the move on FTSE 250 outfit Vectura was part of its long-term strategy to rebrand as a ‘wellness company’
The AA, G4S, Aggreko and Morrisons are among the major firms that have succumbed to takeovers since the coronavirus crisis struck.
Vectura has accepted Philip Morris’ offer and urged shareholders to get behind it too. The London-listed company’s shares rocketed 14 per cent, or 19p, to 154.6p on the news.
Philip Morris’ offer gazumped a £958million buyout that Vectura bosses had previously agreed with US private equity house Carlyle.
Vectura has withdrawn support for the Carlyle bid and scrapped a vote on the tie-up.
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Senior fended off a string of approaches from Lone Star before spurning a final £840million takeover offer last month – prompting the US private equity house to walk away.
Bosses were adamant that the offers ‘fundamentally undervalued’ the firm because it is set to thrive when Covid has passed.
The company is worth £680million, or 161p a share – far lower than Lone Star’s final 200p proposal.
Based in Chippenham in Wiltshire, Vectura specialises in making inhalers and nebulisers.
But it also helps top drug companies to convert their medicines into powders that can be inhaled.
Its customers include Glaxosmithkline and Hikma Pharmaceuticals – and during the pandemic it has been working with Inspira Pharmaceuticals to develop a Covid vaccine.
Philip Morris’ enthusiasm to buy a company that focuses on treating lung conditions comes as tobacco companies are racing to move away from selling traditional cigarettes.
Chief executive Jacek Olczak said it was part of a plan to become a ‘broader healthcare and wellness company’.
Terminally declining sales in the western world – where smoking has been banned in many public spaces – has led all companies in the sector to plough cash into developing new product lines such as vaping.
Philip Morris’ main new product has been IQOS, a cigarette-like device that heats, rather than burns, tobacco, giving users a nicotine hit without any of the damage delivered by smoke.
The company has pledged to make £722million in sales per year by 2025 from what it calls ‘Beyond Nicotine’ products.
In 2016 it first promised to eventually stop selling cigarettes altogether. But last year it sold 263bn Marlboro cigarettes outside the US and China.
And it also owns other popular brands such as Chesterfield and Parliament.
Philip Morris said it intends to run Vectura as an autonomous business that form ‘the backbone’ of an inhaled treatments division.
Vectura employs 400 people and generated revenues of £191million last year.
The deal is worth 150p per share with a 19p dividend, handing Vectura’s bosses around £1million and £400,000 to chairman Bruno Angelici, a former Astrazeneca executive.
Analysts at US brokerage Stifel said they were ‘surprised’ Philip Morris made a higher offer than Carlyle. They added it was ‘hard to see a competing bid or raised offer from Carlyle’.
Russ Mould, investment director at AJ Bell, said: ‘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.’