The Vectura PLC (LON:VEC) share price suggests Philip Morris International’s (PMI) controversial £1bn bid for the asthma inhaler maker is likely to win out over a lower offer from the US private equity giant, Carlyle.
Certainly, last week’s on-market vacuuming up of a 29% stake in Vectura was seen as a decisive step in the right direction for PMI.
But, as a recent article in the Financial Times notes, there are still reasons for the management of the New York-based maker of Marlboro cigarettes to be nervous.
Carlyle hasn’t binned its financially inferior offer of 155p a share, which a number of investors have already accepted. As a result, PMI is left sweating on the decisions of three active fund managers.
This might explain why PMI’s chief executive, Jacek Olczak, used a Daily Telegraph op-ed to say the corporate leopard was changing its spots.
“Philip Morris International is in the midst of a major transformation,” the Telegraph’s readers were told.
“It’s been much in the news of late in the United Kingdom. In case you missed it, the gist is this: PMI is committed to a future without cigarettes, and our recent offer to acquire Vectura Group, a UK-based developer of innovative inhaled drug delivery solutions, is a key part of our broader change.
“These actions have been met with scepticism; we’re not surprised by that, in fact, we welcome constructive conversation about our change.
“However, when scepticism morphs into opposition with no regard to actions or consequences, it can be an impediment towards outcomes global society needs.”
This last sentence is no doubt a less-than-veiled reference to health charities, doctors and experts who wrote to shareholders opposing the deal.
And the PR war continued on Monday (via the Telegraph again) with this from the CEO of Inspira Pharmaceuticals, which is working with Vectura on a Covid treatment.
Rory McGoldrick said: “A tobacco company moving into healthcare does not sound like an obvious marriage, but PMI has very publicly stated its strategy to move away from tobacco and we are assuming its intentions are genuine and should be welcomed.”
PMI’s offer for Vectura, which at 165p is worth 10p a share more than Carlye’s bid, was recommended on “narrow” financial terms, according to a source close to the US buyout firm who was quoted by the FT.
That the shares are trading at just a penny shy of the PMI-tabled deal suggests those narrow financial terms will be decisive.
Carlyle would have had an infinitely better case if had simply matched PMI’s bid – and then left investors to mull on the obvious contradictions around one of the world’s biggest cigarette makers owning an asthma inhaler company.