(Alliance News) - Carlyle Group on Tuesday decided against raising its takeover offer for FTSE 250-listed Vectura Group PLC, despite a boosted bid from acquisition rival Philip Morris International Inc.
The battle to acquire asthma treatment firm Vectura has been rumbling on for months. Marlboro cigarette maker Philip Morris and private equity firm Carlyle had both been set to take part in an auction on Wednesday.
However, since Carlyle opted not to raise its offer, the auction will no longer go ahead.
Vectura was valued at GBP1.02 billion in Philip Morris' most recent offer on Monday, having increased its bid to 165 pence per share, from its 150p a share offer made in July, and besting Carlyle's 155p offer made on Friday. In May, Carlyle offered 136p per Vectura share.
Vectura shares closed 5.6% lower at 163.40p each in London on Tuesday, giving a market capitalisation of GBP978.2 million.
Carlyle on Tuesday said its latest offer is "full and fair" and will not be increased.
"As a result, the proposed auction procedures will not be implemented," Carlyle said.
Vectura had previously backed Carlyle's bid, which at the time topped an initial offer from tobacco firm Philip Morris.
On Friday, when setting out its recommendation for the private equity firm's bid, Vectura said it "may be better positioned under Carlyle ownership to meet both the company's existing strategy, and the interests of a number of its current stakeholders".
Carlyle added on Tuesday: "In the 6 August announcement, the Vectura directors also noted 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.
"In assessing the relative merits of cash offers from Carlyle Bidco or PMI, Carlyle Bidco encourages shareholders to consider the broader context and the impact of each offer on the company and its wider stakeholders in determining which offer to support."
Because of PMI's presence in the tobacco industry, some shareholders may have a preference for the bid from buyout firm Carlyle.
Earlier on Tuesday, PMI switched its bid for Vectura to a takeover offer from a scheme of arrangement.
The New York-based firm said the move will "increase the certainty of its execution".
PMI noted its takeover offer for the asthma treatment firm now has the consent of the UK Takeover Panel and the offer is conditional on more than 50% acceptances.
Vectura makes inhaled medicines, including the Flutiform asthma drug, and drug-delivery devices. Since 2019, it has been moving towards a contract business model in which it supplies services to pharmaceutical firms, rather than developing its own drugs.
The intended acquisition of Vectura comes as part of PMI's new strategy to diversify into what it calls "beyond nicotine" products, with Chief Executive Jacek Olczak saying last month that Marlboro cigarettes "will disappear" from UK shelves over the next 10 years.
In July, Philip Morris bought pharmaceutical firm Fertin Pharma AS for an enterprise value of USD820 million.
Rival British American Tobacco PLC is also looking to shake its association with conventional smoking products as the cigarette maker shifts its focus towards its New Categories division. The division boasts three product offerings: vapour products under the Vuse brand; oral products under Velo; and tobacco heating products under Glo.
By Will Paige; willpaige@alliancenews.com; Updated by Eric Cunha; ericcunha@alliancenews.com
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