VEC.L Regulatory News (VEC)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION OTHER THAN THE UNITED KINGDOM WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

8 August 2021

INCREASED CASH OFFER

for

Vectura Group plc ("Vectura")

by

PMI Global Services Inc. ("PMI Bidder")

a wholly owned direct subsidiary of Philip Morris International Inc. ("PMI")

to be implemented by a Scheme of Arrangement

under Part 26 of the Companies Act 2006

Summary

· The boards of PMI and PMI Bidder are pleased to announce the terms of an increased cash acquisition pursuant to which PMI Bidder will acquire all of the issued and to be issued ordinary share capital of Vectura at a price of 165 pence per share ("PMI Increased Offer").

· Under the terms of the PMI Increased Offer, holders of Vectura Shares ("Vectura Shareholders") shall be entitled to receive:

· The PMI Increased Offer values the entire issued and to be issued ordinary share capital of Vectura at approximately £1.02 billion and represents a premium of approximately:

o 10 pence per share to the price of 155 pence per Vectura Share that Vectura Shareholders would be entitled to receive under the offer announced by Murano Bidco Limited on 6 August 2021;

o 71 per cent. to the volume weighted average Ex‑Dividend Closing Price of 97 pence per Vectura Share for the 3 months ended 25 May 2021 (being the last Business Day prior to the commencement of the offer period);

o 69 per cent. to the volume weighted average Ex‑Dividend Closing Price of 98 pence per Vectura Share for the 1 month ended 25 May 2021 (being the last Business Day prior to the commencement of the offer period); and

o 60 per cent. to the Ex‑Dividend Closing Price per Vectura Share of 103 pence per Vectura Share on 25 May 2021 (being the last Business Day prior to the commencement of the offer period).

· PMI's business model and strategy is driven by a long term commitment to the transformation of its business and not a search for short term gains and efficiency.

· PMI's proposed Acquisition of Vectura is part of its long-term strategy, as outlined in its 2020 integrated report. As part of that vision, PMI will build on its leading scientific capabilities to develop products and services that go Beyond Nicotine. PMI aims to achieve at least $1 billion in annual net revenues from Beyond Nicotine sources in 2025.

· Over the last decade PMI has invested over $8 billion in the research, development and commercialization of new smoke free products. Because of this, PMI understands and is committed to invest the time and resources that it takes to allow for scientific innovation of better products. PMI's "Statement of Purpose" published in its 2020 proxy statement, built on its board's 2017 letter to shareholders, reaffirming PMI's commitment to fundamentally change its business.

· PMI intends to operate Vectura as an autonomous business unit that will form the backbone of PMI's inhaled therapeutics business.

· PMI intends to increase the total level of expenditure on research and development that it believes will further benefit Vectura's differentiated technologies and development expertise for the delivery of complex inhaled therapeutics. In line with the UK's life sciences strategy and in keeping with the UK's position as a major scientific innovator, beyond supporting Vectura's growth, PMI believes these investments will support the scientific ecosystem in the UK for the longer term.

· PMI believes that its significant expertise in scientific research, regulatory science, manufacturing, supply chain and commercialization globally (with operations in over 180 markets), will safeguard and enhance the development of Vectura and its capabilities in complex inhaled therapeutics.

Enquiries:

DLA Piper UK LLP is retained as legal adviser to PMI and PMI Bidder. 

Important Notices

Merrill Lynch International ("BofA Securities"), a subsidiary of Bank of America Corporation, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for PMI in connection with the matters set out in this announcement and for no one else and will not be responsible to anyone other than PMI for providing the protections afforded to its clients or for providing advice in relation to the subject matter of this announcement or any other matters referred to in this announcement.

Further Information

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Acquisition or otherwise.

The Acquisition is, at this time, to be made by means of the Scheme Document (or, if the Acquisition is implemented by way of a Takeover Offer, any document by which the Takeover Offer is made) which, together with the Forms of Proxy (or form of acceptance), contains the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition.

This announcement has been prepared for the purpose of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England and Wales.

This announcement does not constitute a prospectus or prospectus exempted document. 

Overseas Shareholders

The release, publication or distribution of this announcement in or into certain jurisdictions other than the United Kingdom may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by PMI Bidder or required by the Takeover Code, and permitted by applicable law and regulation, the Acquisition shall not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Acquisition by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Acquisition to Vectura Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

The Acquisition shall be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the Financial Conduct Authority.

Additional information for US investors

The Acquisition relates to shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act.

Accordingly, the Acquisition is expected to be made subject to the disclosure and procedural requirements and practices applicable in the United Kingdom and to schemes of arrangement under the laws of England and Wales which differ from the disclosure and other requirements of the United States tender offer and proxy solicitation rules. Neither the SEC, nor any securities commission of any state of the United States, has approved the Acquisition, passed upon the fairness of the Acquisition or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a criminal offence in the United States.

However, if PMI Bidder were to elect (with the consent of the Panel) to implement the Acquisition by means of a takeover offer, such takeover offer shall be made in compliance with all applicable United States laws and regulations, including any applicable exemptions under the US Exchange Act. Such a takeover would be made in the United States by PMI Bidder and no one else.

In the event that the Acquisition is implemented by way of a takeover offer, in accordance with normal United Kingdom practice, PMI Bidder or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, shares or other securities of Vectura outside of the US, other than pursuant to the Acquisition, until the date on which the Acquisition and/or Scheme becomes effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases or arrangements to purchase shall be disclosed as required in the UK, shall be reported to a Regulatory Information Service and shall be available on the London Stock Exchange website at www.londonstockexchange.com.

Each Vectura Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to them, including under applicable United States state and local, as well as overseas and other, tax laws.

Financial information relating to Vectura included in this announcement and the Scheme Document has been or shall have been prepared in accordance with accounting standards applicable in the United Kingdom and may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

Vectura is organised under the laws of a country other than the United States. Some or all of the officers and directors of Vectura, respectively, are residents of countries other than the United States. In addition, most of the assets of Vectura are located outside the United States. As a result, it may be difficult for US shareholders of Vectura to effect service of process within the United States upon Vectura or its officers or directors or to enforce against them a judgment of a US court predicated upon the federal or state securities laws of the United States.

Forward-Looking Statements

This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Acquisition, and other information published by PMI Bidder or any member of the PMI Group contain statements which are, or may be deemed to be, "forward-looking statements". Such forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which PMI Bidder or any member of the PMI Group shall operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements.

The forward‑ looking statements contained in this announcement relate to PMI Bidder or any member of the PMI Group's future prospects, developments and business strategies, the expected timing and scope of the Acquisition and other statements other than historical facts. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "will look to", "would look to", "plans", "prepares", "anticipates", "expects", "is expected to", "is subject to", "budget", "scheduled", "forecasts", "synergy", "strategy", "goal", "cost‑saving", "projects" "intends", "may", "will", "shall" or "should" or their negatives or other variations or comparable terminology. Forward‑looking statements may include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of PMI Bidder's, any member of the PMI Group or Vectura's operations and potential synergies resulting from the Acquisition; and (iii) the effects of global economic conditions and governmental regulation on PMI Bidder's, any member of the PMI Group or Vectura's respective businesses.

By their nature, forward‑looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. These events and circumstances include changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates, future business combinations or disposals, and any epidemic, pandemic or disease outbreak. If any one or more of these risks or uncertainties materialises or if any one or more of the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Such forward-looking statements should therefore be construed in the light of such factors.

Neither PMI Bidder or any member of the PMI Group, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward‑looking statements in this announcement shall actually occur. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements.

Specifically, statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Due to the scale of the Vectura Group, there may be additional changes to the Vectura Group's operations. As a result, and given the fact that the changes relate to the future, the resulting cost synergies may be materially greater or less than those estimated.

The forward‑looking statements speak only at the date of this announcement. All subsequent oral or written forward‑looking statements attributable to any member of the PMI Group or any of their respective associates, directors, officers, employees or advisers, are expressly qualified in their entirety by the cautionary statement above.

The PMI Group and PMI Bidder expressly disclaim any obligation to update such statements other than as required by law or by the rules of any competent regulatory authority, whether as a result of new information, future events or otherwise.

No profit forecasts or estimates

No statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for Vectura for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Vectura.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8 3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they shall be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at http://www.thetakeoverpanel.org.uk/, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Electronic communications

Please be aware that addresses, electronic addresses and certain information provided by Vectura Shareholders, persons with information rights and other relevant persons for the receipt of communications from Vectura may be provided to PMI Bidder during the Offer Period as requested under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.

Publication on website and availability of hard copies

A copy of this announcement shall be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on PMI's website at www.PMI.com by no later than 12 noon (London time) on the business day following the date of this announcement. For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this announcement.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

General

If the Acquisition is effected by way of a Takeover Offer, such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, PMI Bidder intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act so as to acquire compulsorily the remaining Vectura Shares in respect of which the Takeover Offer has not been accepted.

Investors should be aware that PMI Bidder may purchase Vectura Shares otherwise than under any Takeover Offer or the Scheme such as pursuant to privately negotiated purchases.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION OTHER THAN THE UNITED KINGDOM WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

8 August 2021

INCREASED CASH OFFER

for

Vectura Group plc ("Vectura")

by

PMI Global Services Inc. ("PMI Bidder")

a wholly owned direct subsidiary of PMI International Inc. ("PMI")

to be implemented by a Scheme of Arrangement

under Part 26 of the Companies Act 2006

1. Introduction

· On 9 July 2021 the boards of PMI, PMI Bidder and Vectura announced (the "Original Announcement") that they had reached agreement on the terms of a recommended cash acquisition by PMI Bidder, a wholly-owned direct subsidiary of PMI, of the entire issued and to be issued ordinary share capital of Vectura for 150 pence for each Vectura Share (the "Acquisition"), to be implemented by a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act 2006 ("PMI Offer"). On 26 July 2021, the scheme document in respect of the PMI Offer ("Scheme Document") was published and posted (or otherwise made available) to the holders of Vectura Shares (other than those in certain Restricted Jurisdictions) and, for information purposes only, to persons with information rights.

· On 6 August 2021, Murano Bidco Limited, a newly formed company indirectly controlled by funds managed by Carlyle Europe Partners V, announced it had agreed the terms of an increased recommended cash offer for Vectura at a price of 155 pence per Vectura Share ("Revised Carlyle Offer"). The Vectura Directors further announced the withdrawal of their recommendation of the PMI Offer and their intention to adjourn the Shareholder Meetings.

· Today the boards of PMI and PMI Bidder are pleased to announce the terms of an increased cash acquisition pursuant to which PMI Bidder will acquire all of the issued and to be issued ordinary share capital of Vectura at a price of 165 pence per Vectura Share ("PMI Increased Offer").

2. The PMI Increased Offer Price

· Under the PMI Increased Offer, Vectura Shareholders shall be entitled to receive:

· The PMI Increased Offer values the entire issued and to be issued share capital of Vectura at approximately £1.02 billion and represents a premium of approximately:

o 10 pence per share to the price of 155 pence per Vectura Share that Vectura Shareholders would be entitled to receive under the Revised Carlyle Offer;

o 71 per cent. to the volume weighted average Ex‑Dividend Closing Price of 97 pence per Vectura Share for the 3 months ended 25 May 2021 (being the last Business Day prior to the commencement of the offer period);

o 69 per cent. to the volume weighted average Ex‑Dividend Closing Price of 98 pence per Vectura Share for the 1 month ended 25 May 2021 (being the last Business Day prior to the commencement of the offer period); and

o 60 per cent. to the Ex‑Dividend Closing Price per Vectura Share of 103 pence per Vectura Share on 25 May 2021 (being the last Business Day prior to the commencement of the offer period).

If, on or after the date of this announcement, any dividend, distribution or other return of value is declared, made or paid, or becomes payable, by Vectura with a record time falling prior to the Effective Time, PMI Bidder reserves the right to reduce the PMI Offer Price payable under the Acquisition by an amount up to the amount of such dividend, distribution or other return of value or excess. In such circumstances, Vectura Shareholders would be entitled to retain any such dividend, distribution or other return of value declared, made or paid.

If any such dividend, distribution or other return of value is declared, paid or made or becomes payable by Vectura with a record date falling on or after the date of this announcement and on or prior to the Effective Time and PMI Bidder exercises its rights described above, any reference to the PMI Offer Price payable under the terms of the Acquisition shall be deemed to be a reference to the consideration as so reduced. Any exercise by PMI Bidder of its rights referred to in this paragraph shall be the subject of an announcement and, for the avoidance of doubt, shall not be regarded as constituting any revision or variation of the terms of the Scheme.

It is intended that the Acquisition will be effected by means of a Court-sanctioned scheme of arrangement under Part 26 of the Companies Act. However, PMI Bidder reserves the right to effect the Acquisition by way of a Takeover Offer (subject to the prior consent of the Takeover Panel).

3. Background to and reasons for the PMI Increased Offer

PMI has noted the Revised Carlyle Offer. In this context, PMI and PMI Bidder are pleased to announce the terms of the PMI Increased Offer. The background to and reasons for the Acquisition were contained in paragraph 8 of Part 2 of the Scheme Document.

PMI's business model and strategy is driven by a long term commitment to the transformation of its business and not a search for short term gains and efficiency.

PMI's proposed Acquisition of Vectura is part of its long-term strategy, as outlined in its 2020 integrated report. As part of that vision, PMI will build on its leading scientific capabilities to develop products and services that go Beyond Nicotine. PMI aims to achieve at least $1 billion in annual net revenues from Beyond Nicotine sources in 2025.

Over the last decade PMI has invested over $8 billion in the research, development and commercialization of new smoke free products. Because of this, PMI understands and is committed to invest the time and resources that it takes to allow for scientific innovation of better products. PMI's "Statement of Purpose" published in its 2020 proxy statement, built on its board's 2017 letter to shareholders, reaffirming PMI's commitment to fundamentally change its business.

PMI intends to operate Vectura as an autonomous business unit that will form the backbone of PMI's inhaled therapeutics business.

PMI intends to increase the total level of expenditure on research and development that it believes will further benefit Vectura's differentiated technologies and development expertise for the delivery of complex inhaled therapeutics. In line with the UK's life sciences strategy and in keeping with the UK's position as a major scientific innovator, beyond supporting Vectura's growth, PMI believes these investments will support the scientific ecosystem in the UK for the longer term.

PMI believes that its significant expertise in scientific research, regulatory science, manufacturing, supply chain and commercialization globally (with operations in over 180 markets), will safeguard and enhance the development of Vectura and its capabilities in complex inhaled therapeutics.

4. Strategy, directors, management, employees, research and development and locations

PMI's Acquisition is part of a long-term commitment to the transformation of its business, not a search for short term gains and efficiency. PMI intends that Vectura would operate as an autonomous business unit of PMI following the Acquisition and sees employees as a key part of the Acquisition.

PMI believes that one of the major reasons Vectura has achieved the success they have to date is due in large part to the scientific & technical capabilities of the company, the diversity of Vectura's management and the strength of its workforce. The continuity of Vectura's management team and workforce is therefore critical to PMI's long-term goals. PMI has no intention of making any material changes to the conditions of employment for management or employees and intends to further invest in Vectura's capabilities and expertise, to maintain robust leadership development practices as well as the long-term employability of its workforce to further secure and boost its success over time.

As a Fortune 500 company with around 70,000 employees worldwide, PMI can provide long-term employee development and financial stability.

PMI intends to ensure business continuity in the delivery of Vectura's existing business lines and would continue with already announced plans regarding Vectura's headquarters and operations and has no plans for other changes to operations and locations.

Vectura's organisation and science will be a cornerstone of PMI's inhaled therapeutic and wellness propositions of the future. PMI believes that its Beyond Nicotine aerosolisation technologies and development pipeline would provide additional predictability, stability, and security for the future and would complement Vectura's current CDMO activities.

PMI is fully aware of Vectura's capabilities in the inhalation segment and has strong belief in its ability to innovate and support drug development in this segment. In addition to products currently in the pipeline, PMI believes that Vectura's platform and technology can also benefit from PMI's developing pipeline and that the Acquisition will facilitate the augmentation of the combined product portfolio of Vectura and PMI. PMI is supportive of Vectura's current strategy to become one of the leading CDMOs in this segment. PMI further believes that a combination with PMI can bring Vectura significant institutional knowledge, commercial scale, experience in relevant areas and greater financial flexibility and capacity.

Prior to this announcement, consistent with market practice, PMI has been granted access to Vectura's senior management for the purposes of confirmatory due diligence.

Employees and management

PMI believes that one of the major reasons Vectura has achieved the success they have to date is due in no small part to the strength, scientific & technical capabilities and diversity of Vectura's management and the deep scientific expertise of its employees.

Vectura's management and employees will continue to be key to its future success which will be complemented and enhanced by the PMI Group's current capabilities and resources evidenced by PMI's standing as a widely recognised top employer and leader in gender equality, equitable pay, and environmental, social and corporate governance measures. Such recognitions include being:

· the first international company to achieve global EQUAL-SALARY certification;

· included in the 2021 Bloomberg Gender-Equity Index;

· a certified Global Top Employer for five consecutive years by the Top Employers Institute;

· ranked on CDP's A list for climate change for seven years in a row and awarded CDP's "triple A" score in 2020 for efforts to combat climate change and the protection of forests and water security; and

· included in the Dow Jones Sustainability Index North America.

PMI sees Vectura's management team presence and continuity as a critical component of the value of the company and PMI's long term ambitious strategic goals along with the expertise and skills possessed by employees throughout the Company. As such, PMI has no intention of making any material changes to the conditions of employment, nor does PMI intend to make any changes to the balance of skills and functions of Vectura's employees and management. PMI intends to further invest in people capabilities and expertise, and maintain Vectura's robust leadership development practices, as well as the long-term employability of its employees to further secure and boost its success over time.

There may be some limited restructuring required following completion of the Acquisition. In particular, once Vectura ceases to be a listed company, certain corporate and support functions relating to Vectura's status as a listed company may potentially require limited reductions in headcount. Other than in certain corporate and support functions relating to Vectura's status as a listed company, PMI does not intend to make any other headcount reductions, including in the UK.

It is intended that, upon completion of the Acquisition, each of the non-executive members of the Vectura Board shall resign from his or her office as a director of Vectura. Separately, PMI intends to approach select non-executive board members following the Acquisition to explore how their expertise and experience may be of value to guiding the continued development of the business under PMI's ownership, although no such discussions have taken place thus far.

Existing rights and pensions

PMI confirms that, following the Acquisition becoming Effective, the existing contractual and employment rights, including Vectura's pension schemes, of Vectura's management and employees will be respected in accordance with applicable law.

PMI does not intend to make any material changes to the terms & conditions of Vectura's pension schemes, including the employer contributions, accrual of benefits for existing members or the rights of admission of new members.

Management incentivisation arrangements

PMI believes that the value of Vectura is driven by its management and employees and while PMI has not entered into, and has not discussed any form of incentivisation/retention arrangements with, members of Vectura's management, PMI expects to put in place certain incentive arrangements for the management of Vectura following the Acquisition becoming Effective, reflecting the autonomous operation of Vectura under PMI's ownership.

PMI also intends following the Acquisition becoming Effective to provide compensation and incentive programs consistent with Vectura's current compensation schemes, and to establish retention arrangements for Vectura's employees that will be jointly formulated between PMI and Vectura.

Research and development

PMI intends to continue Vectura's existing co-development projects and in-market partnerships and collaborations, and increase the total level of expenditure on research and development in line with PMI's plans and ambitions for Vectura.

In addition, PMI expects that joining forces will create an opportunity for Vectura to continue growing the CDMO business - while honouring existing commitments - and at the same time, together with PMI, take the lead in the creation of a fully owned pipeline of products across a broad range of sectors in the inhaled therapeutics and selfcare wellness space. PMI further expects that Vectura will have the opportunity to undertake the development of inhalable drug/device combinations end-to-end, being part of fully integrated teams where DDC is at its core, and utilising capabilities that PMI would be able to provide (such as pre-clinical, clinical, regulatory expertise and global reach). PMI intends to provide funding to conduct device/technology innovation and execute product development, and to bring such innovations to market with a view to enhancing the current pipeline of products.

Headquarters, locations and fixed assets

As disclosed in its Annual Report and Accounts 2020, Vectura intends to move part of its functions from its headquarters in Chippenham to a new Inhalation Centre of Excellence in the South West of England. PMI intends to continue with this transition. PMI does not intend to make any other material changes in the locations of Vectura's headquarters and headquarter functions.

Lyon site

In March 2021 Vectura signed a put option for the sale of the Lyon manufacturing facility. The sale was completed on 9 June 2021.

Muttenz Site

As announced in November 2020, Vectura intends to significantly reduce the research and development operations in Muttenz, Switzerland by 2022 (including in respect of employees). PMI intends to continue with this footprint optimisation.

Save as set out above, PMI Bidder has no intention to change the locations of Vectura's places of business or to redeploy the fixed assets of Vectura.

Trading Facilities

Vectura Shares are currently listed on the Official List and admitted to trading on the London Stock Exchange. As set out in paragraph 13, applications will be made for the cancellation of the listing of Vectura Shares on the Official List and the cancellation of trading of the Vectura Shares on the Main Market of the London Stock Exchange.

5. Conditions to the Acquisition

The Acquisition will be subject to the same Conditions and further terms as set out in Part 3 of the Scheme Document, including (without limitation) the right, subject to the prior consent of the Panel, to elect to implement the Acquisition by way of a Takeover Offer.

PMI Bidder is pleased to confirm that the Irish Antitrust Condition has been satisfied prior to this announcement.

It is expected that, if the Acquisition is implemented by way of a Scheme or a Takeover Offer, the Acquisition would complete during the second half of 2021.

6. Financing

The PMI Offer Price payable by PMI Bidder under the terms of the Acquisition will be funded from the PMI Group's existing cash resources.

BofA Securities, financial adviser to PMI Bidder, is satisfied that sufficient resources are available to satisfy in full the PMI Offer Price payable to Vectura Shareholders under the terms of the Acquisition.

7. Compliance with Rule 2.7 of the Takeover Code

Save as set out above, PMI Bidder confirms there have been no changes to the information contained in the Scheme Document, in connection with the following requirements of Rule 2.7 of the Takeover Code:

· details of offer-related arrangements (contained in paragraph 8 of Part 6 of the Scheme Document);

· details of any arrangements to which PMI Bidder is a party which relate to circumstances in which it may or may not invoke or seek to invoke a precondition or a condition to the Acquisition and the consequences of its doing so (contained in paragraph 13(c) of Part 6 of the Scheme Document);

· details of any relevant securities of Vectura in which PMI Bidder or any party acting in concert with it has an interest or any person acting in concert with it has a right to subscribe or any short positions in respect of relevant Vectura Shares (contained in paragraph 4(d)(ii) of the Scheme Document);

· details of any relevant securities of Vectura in which PMI Bidder or any person acting in concert with it has borrowed or lent (contained in paragraph 4(d)(iv) of Part 6 of the Scheme Document); and

· details of any dealing arrangement (of the kind referred to in Note 11 of the definition of Acting in Concert in the Takeover Code) in relation to relevant securities of Vectura (contained in paragraph 4(d)(viii) of Part 6 of the Scheme Document).

8. General

PMI Bidder reserves the right to elect (with the consent of the Panel) to implement the Acquisition by way of a Takeover Offer for the Vectura Shares as an alternative to the Scheme. In such event, the Takeover Offer shall be implemented on the same terms, so far as applicable, as those which would apply to the Scheme, subject to appropriate amendments, including (without limitation) an acceptance condition set at 90 per cent. or such lesser percentage (being more than 50 per cent.) as PMI Bidder may decide or as required by the Panel, of the shares to which such Takeover Offer relates.

The Scheme Document and the Forms of Proxy accompanying the Scheme Document were published on 26 July 2021. The Scheme Document and Forms of Proxy are made available to all Vectura Shareholders at no charge to them.

BofA Securities (as PMI Bidder's financial advisers) has given and not withdrawn its consent to the publication of this announcement with the inclusion herein of the references to its name in the form and context in which it appears.

In addition to the documents which are already available for inspection, as set out in the Original Announcement and the Scheme Document, a copy of this announcement shall be made available, subject to certain restrictions relating to persons resident in certain Restricted Jurisdictions, on PMI's website at www.PMI.com until the Effective Date. For the avoidance of doubt, neither the contents of that website nor the contents of any website accessible from hyperlinks on that website (or any other websites referred to in this announcement) are incorporated into, or form part of, this announcement.

The bases and sources of certain financial information contained in this announcement are set out in Appendix I to this announcement. 

Capitalised terms in this announcement shall, unless otherwise defined in this announcement, have the same meanings as given to them in the Scheme Document.

Enquiries:

DLA Piper UK LLP is retained as legal adviser to PMI and PMI Bidder. 

Important Notices

Merrill Lynch International ("BofA Securities"), a subsidiary of Bank of America Corporation, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting exclusively for PMI in connection with the matters set out in this announcement and for no one else and will not be responsible to anyone other than PMI for providing the protections afforded to its clients or for providing advice in relation to the subject matter of this announcement or any other matters referred to in this announcement.

Further Information

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Acquisition or otherwise.

The Acquisition is, at this time, to be made by means of the Scheme Document (or, if the Acquisition is implemented by way of a Takeover Offer, any document by which the Takeover Offer is made) which, together with the Forms of Proxy (or form of acceptance), contains the full terms and conditions of the Acquisition, including details of how to vote in respect of the Acquisition.

This announcement has been prepared for the purpose of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England and Wales.

This announcement does not constitute a prospectus or prospectus exempted document. 

Overseas Shareholders

The release, publication or distribution of this announcement in or into certain jurisdictions other than the United Kingdom may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by PMI Bidder or required by the Takeover Code, and permitted by applicable law and regulation, the Acquisition shall not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Acquisition by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction. Accordingly, copies of this announcement and all documents relating to the Acquisition are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Acquisition (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Acquisition to Vectura Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

The Acquisition shall be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the Financial Conduct Authority.

Additional information for US investors

The Acquisition relates to shares of a UK company and is proposed to be effected by means of a scheme of arrangement under the laws of England and Wales. A transaction effected by means of a scheme of arrangement is not subject to the tender offer rules or the proxy solicitation rules under the US Exchange Act.

Accordingly, the Acquisition is expected to be made subject to the disclosure and procedural requirements and practices applicable in the United Kingdom and to schemes of arrangement under the laws of England and Wales which differ from the disclosure and other requirements of the United States tender offer and proxy solicitation rules. Neither the SEC, nor any securities commission of any state of the United States, has approved the Acquisition, passed upon the fairness of the Acquisition or passed upon the adequacy or accuracy of this document. Any representation to the contrary is a criminal offence in the United States.

However, if PMI Bidder were to elect (with the consent of the Panel) to implement the Acquisition by means of a takeover offer, such takeover offer shall be made in compliance with all applicable United States laws and regulations, including any applicable exemptions under the US Exchange Act. Such a takeover would be made in the United States by PMI Bidder and no one else.

In the event that the Acquisition is implemented by way of a takeover offer, in accordance with normal United Kingdom practice, PMI Bidder or its nominees, or its brokers (acting as agents), may from time to time make certain purchases of, or arrangements to purchase, shares or other securities of Vectura outside of the US, other than pursuant to the Acquisition, until the date on which the Acquisition and/or Scheme becomes effective, lapses or is otherwise withdrawn. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases or arrangements to purchase shall be disclosed as required in the UK, shall be reported to a Regulatory Information Service and shall be available on the London Stock Exchange website at www.londonstockexchange.com.

Each Vectura Shareholder is urged to consult their independent professional adviser immediately regarding the tax consequences of the Acquisition applicable to them, including under applicable United States state and local, as well as overseas and other, tax laws.

Financial information relating to Vectura included in this announcement and the Scheme Document has been or shall have been prepared in accordance with accounting standards applicable in the United Kingdom and may not be comparable to financial information of US companies or companies whose financial statements are prepared in accordance with generally accepted accounting principles in the United States.

Vectura is organised under the laws of a country other than the United States. Some or all of the officers and directors of Vectura, respectively, are residents of countries other than the United States. In addition, most of the assets of Vectura are located outside the United States. As a result, it may be difficult for US shareholders of Vectura to effect service of process within the United States upon Vectura or its officers or directors or to enforce against them a judgment of a US court predicated upon the federal or state securities laws of the United States.

Forward-Looking Statements

This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Acquisition, and other information published by PMI Bidder or any member of the PMI Group contain statements which are, or may be deemed to be, "forward-looking statements". Such forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which PMI Bidder or any member of the PMI Group shall operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements.

The forward‑ looking statements contained in this announcement relate to PMI Bidder or any member of the PMI Group's future prospects, developments and business strategies, the expected timing and scope of the Acquisition and other statements other than historical facts. In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "will look to", "would look to", "plans", "prepares", "anticipates", "expects", "is expected to", "is subject to", "budget", "scheduled", "forecasts", "synergy", "strategy", "goal", "cost‑saving", "projects" "intends", "may", "will", "shall" or "should" or their negatives or other variations or comparable terminology. Forward‑looking statements may include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of PMI Bidder's, any member of the PMI Group or Vectura's operations and potential synergies resulting from the Acquisition; and (iii) the effects of global economic conditions and governmental regulation on PMI Bidder's, any member of the PMI Group or Vectura's respective businesses.

By their nature, forward‑looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. These events and circumstances include changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates, future business combinations or disposals, and any epidemic, pandemic or disease outbreak. If any one or more of these risks or uncertainties materialises or if any one or more of the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected. Such forward-looking statements should therefore be construed in the light of such factors.

Neither PMI Bidder or any member of the PMI Group, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward‑looking statements in this announcement shall actually occur. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements.

Specifically, statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies. As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated. Due to the scale of the Vectura Group, there may be additional changes to the Vectura Group's operations. As a result, and given the fact that the changes relate to the future, the resulting cost synergies may be materially greater or less than those estimated.

The forward‑looking statements speak only at the date of this announcement. All subsequent oral or written forward‑looking statements attributable to any member of the PMI Group or any of their respective associates, directors, officers, employees or advisers, are expressly qualified in their entirety by the cautionary statement above.

The PMI Group and PMI Bidder expressly disclaim any obligation to update such statements other than as required by law or by the rules of any competent regulatory authority, whether as a result of new information, future events or otherwise.

No profit forecasts or estimates

No statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings or earnings per share for Vectura for the current or future financial years would necessarily match or exceed the historical published earnings or earnings per share for Vectura.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified. An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8 3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they shall be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at http://www.thetakeoverpanel.org.uk/, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Electronic communications

Please be aware that addresses, electronic addresses and certain information provided by Vectura Shareholders, persons with information rights and other relevant persons for the receipt of communications from Vectura may be provided to PMI Bidder during the Offer Period as requested under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.

Publication on website and availability of hard copies

A copy of this announcement shall be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on PMI's website at www.PMI.com by no later than 12 noon (London time) on the business day following the date of this announcement. For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this announcement.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments. Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

General

If the Acquisition is effected by way of a Takeover Offer, such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, PMI Bidder intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act so as to acquire compulsorily the remaining Vectura Shares in respect of which the Takeover Offer has not been accepted.

Investors should be aware that PMI Bidder may purchase Vectura Shares otherwise than under any Takeover Offer or the Scheme such as pursuant to privately negotiated purchases.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.

Appendix ISources of Information and Bases of Calculation

(i) As at 5 August 2021 (being the latest practicable date prior to publication of this announcement), there were 599,485,373 Vectura Shares in issue.

(ii) Any references to the issued and to be issued share capital of Vectura are based on:

· the 599,485,373 Vectura Shares in issue referred to in paragraph (i) above (which includes 404,580 Vectura Shares held in the Vectura Group Employee Benefit Trust and 3,900,133 Vectura Shares in the Vectura Group Employee Share Trust to be used to satisfy options and awards under the Vectura Share Plans); and

· up to 18,566,693 Vectura Shares which may be issued on or after the date of this announcement to satisfy the exercise of options or vesting of awards pursuant to the Vectura Share Plans.

(iii) The value of the Acquisition based on the PMI Offer Price of 165 pence per Vectura Share is calculated on the basis of the issued and to be issued share capital of Vectura (as set out in paragraph (ii) above).

(iv) Closing Prices and volume‑weighted average prices are taken from Bloomberg and have been rounded to the nearest pence.

(v) Where quoted, foreign exchange spot rates are taken from Bloomberg.

(vi) Unless otherwise stated, all prices quoted for Vectura Shares are Closing Prices.

(vii) Unless otherwise stated, the financial information relating to Vectura is extracted from the audited consolidated financial statements of Vectura for the financial year to 31 December 2020, prepared in accordance with International Financial Reporting Standards.