Update: Bidding war breaks out for respiratory specialist Vectura


A flurry of new offers by Philip Morris International (PMI) and private equity firm Carlyle has hiked the value of respiratory medicines company Vectura to £1 more than a billion ($1.4 billion), with the tobacco giant leading the bidding at the latest count.

Carlyle first broke ground with a 136 pence per share offer that was agreed by Vectura in May, only to be trumped by a 150p bid by PMI a few weeks later.

On Friday, Carlyle upped the ante once again with raised to 155p – pushing the value of Vectura to around $1.3 billion – only for PMI to hit straight back with a 165p bid this morning.

Vectura had withdrawn its backing for PMI after the latest Carlyle offer came through. This morning it said it was withdrawing its intention to recommend the Carlyle offer, adding that at this stage it "will not state an intention" to recommend the PMI offer to shareholders.

"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 added.

PMI's first offer was followed by pushback from doctors, health charities and some politicians about the wisdom of a pharmaceutical company becoming closely entwined with big tobacco, despite PMI's assertions that it would run the drugmaker as an autonomous business unit.

Last month, the chief executives of charities Cancer Research UK, Asthma UK, the British Lung Foundation Partnership, and Action on Smoking and Health wrote to UK Business Secretary Kwasi Kwarteng and Health Secretary Sajid Javid, calling on the government to stop the deal going through.

They said there is "a real prospect that PMI will use this acquisition to legitimise tobacco industry participation in health debates within the UK."


Vectura seems to have been swayed by the pushback, as well as suggestions it may be unable to work with respiratory scientists. It said in its statement on Friday that its directors "note the reported uncertainties relating to the impact on Vectura's wider stakeholders arising as a result of the possibility of the company being owned by PMI."

PMI has also hit back against Carlyle, noting that it is making "a long term commitment to the transformation of its business and not a search for short term gains and efficiency" – a swipe at the company and other investment firms that buy businesses in the hope of selling them on at profit in a few years.

PMI and other tobacco giants are desperately trying to reinvent themselves after decades of association with health-harming cigarettes, and PMI chief executive Jacek Olczak has made much of the company's ambition to make 50% of its revenues from smoke-free products by 2025.

There's no disguising that tobacco makers are facing steep declines in tobacco smoking in big markets that are not being replaced by a shift to nicotine vapes, and PMI has been talking about a move into inhaled medicines and "selfcare wellness" to sustain the business long term.

(Updated on 9 August to include Vectura's statement in response to the second PMI offer).