Vectura bidding war averted as Carlyle refuses to raise offer

Private equity firm Carlyle has refused to increase its offer for UK respiratory firm Vectura shortly before the five-day bidding war with rival Philip Morris International (PMI) was due to commence.

The company maintains its bid of £958 million (€1.13 billion) was "full and fair" and has urged shareholders to support its offer in a bid to prevent PMI from sealing the winning bid, despite offering over £1 billion for the UK drugmaker.

The creator of Marlboro cigarettes hopes to use Vectura's expertise in respiratory drugs in a bid to reinvent itself in a world that is cautious over health concerns associated with smoking - something which has caused outrage anti-smoking and respiratory illness campaigners and various medical bodies.

Read more: Philip Morris raises its bid on Vectura

PMI claims it wishes to usher in a smoke-free future, by shifting its offering to cigarette alternatives or bids to stop people smoking, and have even called for cigarettes to be banned.

However, it continues to make 75% of its profits from cigarettes, and many campaigners have noted the company are just as responsible for the myriad health effects associated with smoking as any other tobacco giant.

The group has already revealed it will be pulling Marlboro cigarettes from UK shelves within a decade, with no news yet on the state of the brand in the rest of the world.

PMI has until 5 pm on August 12 to revise its offer.

Vectura's shareholders have backed both parties at various points - initially supporting PMI's bid when its original bid came through in July, before expressing support for Carlye's bid on Friday, before retracting it on Monday.

The company will continue to specialise in inhaled medicines to treat respiratory illnesses going into the future.

Carlyle warned Vectura could be banned from scientific forums should it accept PMI's bid, after medical firms and scientists agreed to freeze out Vectura should it be bought out by the tobacco giant.

Read more: Marlboro cigarettes to disappear from UK shelves "within 10 years"

Carlyle has also expressed hope Vectura will take their bid, for ethical and social reasons.

It remains to be seen if Vectura will accept the lower bid. While unlikely, it would not be the first time this has happened.

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