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

9 August 2021

SWITCH FROM SCHEME OF ARRANGEMENT TO A TAKEOVER OFFER

for

Vectura Group plc ("Vectura")

by

PMI Global Services Inc. ("PMI Bidder")

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

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 (the "Acquisition") for 150 pence for each Vectura Share, to be implemented by a Court-sanctioned scheme of arrangement (the "Scheme") 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.

· On 8 August 2021 the boards of PMI and PMI Bidder announced as part of its Acquisition an increased cash offer 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").

· On 9 August 2021 the Takeover Panel announced a competitive situation for the purposes of Rule 32.5 of the Takeover Code existed and established an auction procedure be followed from 5.00pm (London Time) on Tuesday 10 August 2021 (the "Auction").

2. Switch from a Scheme to a Takeover Offer

PMI and PMI Bidder are of the view that the Acquisition is in the best interest of Vectura Shareholders and therefore, in order to increase the certainty of its execution, PMI and PMI Bidder have determined, with the consent of the Panel and in advance of the Auction, to implement the Offer by way of a Takeover Offer rather than by way of the Scheme.

The conditions to the PMI Offer will be amended only insofar as required to reflect the implementation of the Acquisition by way of a takeover offer under Part 26 of the Companies Act 2006 (the "Takeover Offer"). The amended conditions will be set out in full in the Offer Document.

The Takeover Offer will be conditional upon valid acceptances of the Offer having been received (and not, where permitted, withdrawn) by the first closing date (or such later time and/or date as PMI Bidder, subject to the rules of the Takeover Code or with the consent of the Panel, decides) in respect of Vectura Shares which, together with the Vectura Shares acquired or agreed unconditionally to be acquired during the Offer Period, will result in PMI Bidder and/or another member of the PMI Group holding Vectura Shares carrying in aggregate more than 50 per cent. of the voting rights normally exercisable at general meetings of Vectura including (to the extent, if any, required by the Panel for this purpose) any such voting rights attaching to any Vectura Shares that are unconditionally allotted but not issued before the Offer becomes unconditional as to acceptances.

3. 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 Vectura Share announced by Murano Bidco Limited on 6 August 2021 ("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).

4. Background to and Reasons for the Acquisition

In addition to its statements in its prior announcements and the Scheme Document in respect of its strategic rationale for the Acquisition, PMI and PMI Bidder believes:

· PMI's has the resources, commitment and patience to both advance Vectura's existing strategy, and also further it geographically and extend into the development of proprietary inhaled therapeutic products, alongside the existing CDMO business.

· PMI strongly supports and is aligned with Vectura's strategy of delivering drugs through inhalation using innovative technology that can effectively address many of today's unmet medical needs. The inhalation mode of administration allows for fast systemic absorption, potential fast onset of effect and a better safety profile due to the lower dose needed compared to standard of the care today.

· PMI's Beyond Nicotine strategy is built on two key growth areas - (1) inhaled therapeutics where we have already committed resources to our development pipeline of inhaled over-the-counter and prescription products and (2) developing and commercializing scientifically substantiated products and solutions that improve people's lives in areas like energy, sleep, calm and focus.

· PMI's significant expertise in aerosolization and inhalation, pre-clinical safety and clinical studies, as well as behavioral research and post-market studies forms the foundation of a science-based company that can continue to apply its skills to Life Sciences.

· PMI's commitment to transform itself requires an evolution into different industries with the application of our significant expertise in the inhalation space to address unmet medical and consumer needs by delivering products and solutions that improve people's lives. 

· Operating Vectura as an autonomous business unit forming the backbone of PMI's inhaled therapeutics business, PMI will give Vectura the opportunity and tools to undertake the end-to-end development of inhalable drug-device combinations and will provide access to PMI's capabilities in areas such as pre-clinical safety, clinical development, regulatory affairs, drug safety, market access and global reach.

· 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.

· Vectura can help bring the initial pipeline of "Beyond Nicotine" concepts that PMI has developed or acquired to market. This will exemplify PMI's strategy and give increased confidence in our transformation to the scientific community and to the public.

· 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.

5. Offer Document and Timetable

As the Acquisition is to be implemented by way of the Takeover Offer, PMI and PMI Bidder will request that the court meeting in connection with the Scheme be adjourned and the relevant resolutions relating to the Scheme will not be voted on by Vectura Shareholders.

The offer document, which will contain the full terms and conditions of the Acquisition and procedures for its acceptance (the "Offer Document"), will be posted to Vectura Shareholders within 10 business days of this announcement (or such later date as may be agreed between Vectura and PMI Bidder or determined by PMI Bidder, subject to the consent of the Takeover Panel), together with the related form of acceptance (other than to Vectura Shareholders located in any Restricted Jurisdictions, where to do so would violate the laws of the applicable Restricted Jurisdiction).

The first closing date is expected to be the date falling 21 days following the date on which the Offer Document is published. Further details of the expected timetable will be set out in the Offer Document.

For information purposes only, the Offer Document will also be sent or made available, to participants in the Vectura share option scheme and plans and persons with information rights.

6. Delisting, Compulsory Acquisition and Re-registration

Assuming the Takeover Offer becomes or is declared unconditional in all respects and that PMI Bidder has, by virtue of its shareholdings and acceptances of the Takeover Offer or otherwise, acquired or agreed to acquire not less than 75 per cent. of the issued share capital of Vectura, it is intended that the listing of Vectura on the London Stock Exchange will be cancelled.

If PMI Bidder receives acceptances under the Takeover Offer in respect of, and/or otherwise acquires, or unconditionally contracts to acquire, 90 per cent. or more of the Vectura Shares by nominal value and voting rights attaching to such shares to which the Takeover Offer relates and the Takeover Offer has become or been declared unconditional in all respects, PMI Bidder intends to exercise its rights pursuant to the provisions of Chapter 3 of Part 28 of the Companies Act to acquire compulsorily the remaining Vectura Shares in respect of which the Takeover Offer has not been accepted on the same terms as the Takeover Offer.

It is also intended that, following the Takeover Offer becoming unconditional in all respects Vectura will be re-registered as a private limited company.

PMI Bidder reserves the right to increase the amount of the offer price in the Auction, or if there is an announcement on or after the date of this announcement of an offer or possible offer for Vectura by a third party or potential offeror.

7. General

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. 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.

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 to be made 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 Takeover Offer. The Acquisition is being made for securities of a UK company and Vectura Shareholders in the United States should be aware that this document and any other documents relating to the Acquisition have been or will be prepared in accordance with the Takeover Code and UK disclosure requirements, format and style, all of which differ from those in the United States. Vectura's financial statements, and all financial information that is included in this document, or any other documents relating to the Acquisition, have been or will be prepared in accordance with IFRS and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

The Acquisition will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, offer timetable, settlement procedures and timing of payments that are different from those applicable under United States domestic tender offer procedures and laws. US investors should note that once the Acquisition is declared unconditional in all respects, PMI Bidder will accept all Vectura Shares that have by that time been validly tendered in acceptance of the Acquisition and will, in accordance with the Takeover Code, pay for all such accepted Vectura Shares within 14 calendar days of such date, rather than the three trading days that US investors may be accustomed to in US domestic tender offers. Similarly, if the Acquisition is terminated or withdrawn, all documents of title will be returned to shareholders within 14 calendar days of such termination or withdrawal. Notwithstanding the foregoing, PMI Bidder will, to the extent practicable, pay for or return tendered Vectura Shares within seven to ten calendar days from the relevant date.

Neither the SEC nor any US state securities commission has approved or disapproved the Acquisition or passed upon the adequacy or completeness of this document. It may be difficult for US holder of Vectura securities to enforce their rights under any claim arising out of the US federal securities laws, since PMI, PMI Bidder and Vectura are located outside of the United States, and some or all of their office and directors may be resident outside the United States.

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.

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 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.