(Alliance News) - Philip Morris International said on Friday it has agreed a deal to buy London-listed asthma treatment firm Vectura Group, as the Marlboro cigarette maker looks to expand beyond tobacco and nicotine.
Philip Morris will pay 150 pence per share in cash for Vectura, a Wiltshire, England-based inhaled drug delivery devices maker. Adding a 19p interim dividend, the deal values the FTSE 250 constituent at GBP1.04 billion.
Shares in Vectura closed at 135.6p on Thursday, giving the company a market capitalisation of GBP805 million. The stock jumped 13% early Friday to 152.59p.
Following the PMI offer, Vectura's directors withdrew their recommendation for a GBP958 million takeover by funds managed by private equity firm Carlyle Group Inc. PMI's offer is a 10% premium to Carlyle's 136p per share bid.
"PMI is expanding into products beyond tobacco and nicotine, as part of a natural evolution into a broader healthcare and wellness company," the New York-based company said.
In February, Philip Morris announced plans to generate at least USD1 billion of annual revenue from its Beyond Nicotine range by 2025. Respiratory delivery drugs are seen as key to that.
Philip Morris owns some of the world's biggest cigarette brands - also including L&M, Chesterfield and Parliament. It sold 263 billion Marlboro cigarettes outside the US and China in 2019.
However, its self promotion of late has been all about "Delivering a Smoke-Free Future". "PMI is building its future on replacing cigarettes with smoke-free products that—while not risk-free—are a far better choice than cigarette smoking," its website says.
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: up 0.5% at 7,065.29
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Hang Seng: up 0.9% at 27,385.09
Nikkei 225: closed down 0.6% at 27,940.42
DJIA: closed down 259.86 points, or 0.8%, at 34,421.93
S&P 500: closed down 37.31 points, or 0.9%, at 4,320.82
Nasdaq Composite: closed down 105.28 points, or 0.7%, at 14,559.79
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EUR: down at USD1.1827 (USD1.1842)
GBP: flat at USD1.3768 (USD1.3763)
USD: up at JPY110.11 (JPY109.79)
GOLD: up at USD1,798.17 per ounce (USD1,796.50)
OIL (Brent): up at USD74.30 a barrel (USD73.70)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Friday's Key Economic Events still to come
Italy G20 finance ministers and central bank governors meeting
1230 BST UK NIESR monthly GDP tracker
1000 EDT US monthly wholesale trade
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The UK economy grew for a fourth straight month in May, the Office for National Statistics said, but by less than expected despite pubs and restaurants in England being able to serve indoors again. UK gross domestic product grew 0.8% in May from April, missing forecasts for a stronger monthly gain of 1.7%, according to FXStreet, and below April's growth of 2.0%, which itself was revised down from 2.3%. The economy remains 3.1% below its pre-virus levels, the ONS said. For the first quarter of 2021, the UK economy is estimated to have shrank by 1.6% from the fourth quarter of 2020, revised from the initial reading of a 1.5% decline. Compared with the same quarter a year ago, the UK economy shrank by an unrevised 6.1%.
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UK Chancellor of the Exchequer Rishi Sunak has stressed the benefits of getting back to the workplace when coronavirus restrictions lift. The order to work from home is expected to be scrapped on July 19 in England and Sunak said he looked forward to the shift back to offices. Sunak told the Daily Telegraph: "I think for young people, especially, that ability to be in your office, be in your workplace and learn from others more directly, is something that's really important and I look forward to us slowly getting back to that." Meanwhile, the NHS Covid-19 app could be tweaked to make it less sensitive to prevent people being "pinged" unnecessarily. The head of the UK Health Security Agency, Jenny Harries, told the Commons Public Accounts Committee on Thursday that work was being done to "tune" the app to work within an increasingly vaccinated population to ensure it was there "for a purpose, not for annoyance".
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China has hit back at UK calls to boycott the 2022 Beijing Winter Olympics, saying any such practice "is doomed to fail". The Foreign Affairs Committee of Parliament said on Thursday the government should boycott the Games to heap pressure on China over its alleged mass detention of more than one million Uighur Muslims in Xinjiang. Following a similar call from Labour, the committee said ministers should not attend the Beijing Winter Olympics and "should urge others not to do so". However, China's Foreign Ministry spokesman Wang Wenbin dismissed the boycott threat as an "attempt to disrupt, obstruct and sabotage the preparation and convening of the Beijing Winter Olympic Games out of political motivation". UK Prime Minister Boris Johnson said during Prime Minister's Questions on Wednesday he will consider calls for a diplomatic boycott, but is "instinctively against" taking such action.
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The US will add more than 10 more Chinese firms to an economic blacklist due to alleged human rights abuses against Muslim minority groups in Xinjiang, Reuters reported. An announcement from Joe Biden's administration could be made as early as Friday, Reuters added, citing two sources. The identities of the companies were not immediately known, though some firms from other nations could also be added to the list. One of the news agency's sources said 14 Chinese companies could be added to the list.
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BROKER RATING CHANGES
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BERENBERG RAISES BUNZL TO 'BUY' ('HOLD') - TARGET 2,750 (2,650) PENCE
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BARCLAYS RAISES WATCHES OF SWITZERLAND TARGET TO 915 (825) PENCE - 'OVERWEIGHT'
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JEFFERIES RAISES WATCHES OF SWITZERLAND PRICE TARGET TO 990 (800) PENCE - 'BUY'
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JEFFERIES RESUMES RICARDO WITH 'BUY' - TARGET 530 PENCE
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PEEL HUNT RAISES FULLER SMITH & TURNER TO 'ADD' ('HOLD') - TARGET 900 PENCE
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COMPANIES - FTSE 100
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London-based commercial property developer Land Securities said it made good progress with rent collection in the June quarter. As at July 7, 81% of net rent due on June 24 had been paid. Of the GBP18 million of rent outstanding, GBP6 million relates to customers who have withheld payment pending documentation of agreed concessions. Landsec also confirmed that the first quarter dividend for the current financial year will be 7.0p per share, paid in October.
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COMPANIES - FTSE 250
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Derwent - a property developer and landlord focused on central London - also released a positive rent collection update, saying it has received 89% of total rent due for the June quarter, with a further 5% expected later.
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Polymer supplier Victrex said it sees upside risk to current full-year expectations, but warned of headwinds for the 2022 financial year. The company said it is seeing continued momentum in most end markets and posted 37% growth in third quarter revenue to GBP80.7 million, with sales volumes of 1,202 tonnes up 49% year-on-year. On a year-to-date basis, being the nine months to June 30, revenue was up 10% year-on-year at GBP231.6 million. "Reflecting the volume strength on a year to date basis, we now see the potential for some upside to current full year expectations, with our internal assumptions being closer to the upper end of market expectations," said Chief Executive Jakob Sigurdsson. However, he noted that for the 2022 financial year, Victrex will have to contend with foreign currency headwinds, increasing raw material inflation, an anticipated uplift in innovation spend to support the long-term growth pipeline, and some costs associated with commissioning its China manufacturing facility. "These effects will weigh on our 2022 prospects, although we remain focused on growth," said Sigurdsson.
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COMPANIES - MAIN MARKET AND AIM
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Senior, which makes components for aerospace, defence and energy clients, said trading in the first half of 2021 has been ahead of management expectations. Group sales will be 13% down on a year before on a constant currency basis. Aerospace sales were "modestly ahead of expectations" with an annual decline of 21%, while sales in the Flexonics division were in line with expectations, rising by 6%.
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Friday's Shareholder Meetings
J Sainsbury PLC - AGM
RiverFort Global Opportunities PLC - AGM
Melrose Industries PLC - GM re capital return
FastForward Innovations Ltd - GM re company name change
OptiBiotix Health PLC - AGM
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By Tom Waite; thomaslwaite@alliancenews.com
Copyright 2021 Alliance News Limited. All Rights Reserved.
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