(Alliance News) - Vectura Group PLC on Wednesday noted the decision by Carlyle Group, which it announced late Tuesday, to not increase its cash offer of 155 pence per Vectura share.
This means the proposed auction against Philip Morris International Inc has now been cancelled.
The battle to acquire asthma treatment firm Vectura has been rumbling on for months, with Marlboro cigarette maker Philip Morris and private equity firm Carlyle having been set to take part in an auction on starting Wednesday.
Philip Morris now has until Thursday afternoon to revise its own takeover offer of 165p per share, which values Vectura at GBP1.02 billion. At that point, Vectura said it will make a further announcement.
The Vectura board hasn't yet accepted Philip Morris's offer, having withdrawn its support for Carlyle's lower offer.
A bidding war between the two acquisition rivals had seen several raised offers. Philip Morris's offer, made on Monday, of 165p per share was an increase from its 150p a share offer made in July. It bested Carlyle's 155p offer, made on Friday. In May, Carlyle offered 136p per Vectura share.
Vectura shares were 0.2% lower at 163.03p each in London on Wednesday morning, giving a market capitalisation of GBP977.1 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 Philip Morris' presence in the tobacco industry, some shareholders may have a preference for the bid from buyout firm Carlyle.
Earlier on Tuesday, Philip Morris 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".
Philip Morris 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 Philip Morris' 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
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