Philip Morris International (PMI), the company that produces Marlboro cigarettes, has confirmed that its bid for inhaler maker Vectura has gone unconditional, as a majority of the target company’s shareholders have agreed to sell their stock.
PMI said it has the support of 74 percent of shareholders in Vectura, pushing the number above the 50 percent threshold required for the deal. It is now urging remaining shareholders to accept the deal.
The fact that the offer has become “unconditional” means that the remaining shareholders are unable to prevent it from happening and may be forced to sell. While September 15 is the deadline for Vectura investors to decide whether or not to sell the PMI.
The company said: “All remaining conditions of the offer are satisfied or waived where applicable.
“Accordingly … the offer has been unconditional in all respects.”
The deal has been particularly controversial, with both medical groups and charities on the board cautioning against selling off the cigarette business. However, the Marlboro manufacturer has reported that it already has some expertise in areas such as respiratory therapy.
There are also concerns that while the company claims to have ambitions for a “smoke-free” future, it still generates most of its revenue from cigarettes.
PMI chief executive Jacek Olzak argued that Vectura would play an “important role” in the company’s “Beyond Nicotine” strategy.
He explained: “We have reached a significant milestone in the acquisition of Vectura and have secured more than 74 percent of the company’s shares, which is more than the 50 percent required to make our offer unconditional and PMI a majority shareholder.” is more.
“We are very excited about Vectura’s important role in our Beyond Nicotine strategy and look forward to working with Vectura scientists and providing them with the resources and expertise to grow their business so we can generate at least one billion dollars.” (£720 million) in net revenue from Beyond Nicotine products by 2025.
The inhaler manufacturer’s board unanimously recommended that shareholders approve a £1.1 billion acquisition of PMI, and thereafter, PMI began buying shares on the open market, acquiring a 29.9 percent stake.
Any remaining shareholders were then asked to approve the deal and sell their shares in-principle. The 50 percent limit was required to complete the deal and now that it has been reached, the remaining shareholders are expected to fall in line.
Market rules governing acquisitions meant that PMI was not allowed to build its holdings by buying shares from US-based investors. However it was able to buy the stock from other international investors to reach its 50 percent target.
As well as being controversial, the acquisition could also affect research for the firm, as many universities have regulations that prevent them from taking funding from cigarette businesses and their subsidiaries.
Sarah Woolnough, chief executive of Asthma UK and the British Lung Foundation, criticized Vectura’s decision to sell, suggesting that the inhaler maker had “prioritized short-term financial gains over Vectura’s long-term viability as a business.”
Ms Woolno said: “Vectura has sold millions of people with lung disease, and has instead prioritized short-term financial gains over Vectura’s long-term viability as a business.
“Vectura is now owned by a tobacco company, and this could cause considerable problems, such as the firm being excluded from the research and clinical network.
“This creates a perverse incentive for Philip Morris International to sell its more harmful products so that they can turn a profit again through the treatment of smoking-related diseases.
“There is now a very real risk that Vectura’s deal with Big Tobacco will cause the cigarette industry to have an undue influence on UK health policy.
She said: “We call on the government to stick to its commitment to the World Health Organization’s Framework Convention on Tobacco Control to prevent this from happening.”
PA. Additional reporting by
Credit: www.independent.co.uk /