Battle for Vectura goes to sealed bids

A BATTLE between the world’s biggest tobacco firm and one of the best-known buyout funds to buy a Cotswolds-based drugmaker is set to go to sealed bids, after a rare five-day auction was announced by the takeover regulator.

Philip Morris International and Carlyle will duke it out from tomorrow for the right to acquire Vectura, a FTSE 250 company that sells medicines to treat smoking-related diseases.

The board of Vectura has flip-flopped between Philip Morris, the maker of Marlboro cigarettes, and US investment firm Carlyle.

Vectura withdrew support for a takeover worth £1bn by Philip Morris on Friday and swung in behind Carlyle, which lodged an improved offer. Philip Morris yesterday increased its offer in response, but Vectura said that it would not support either deal. Neither party has declared its bid “final”.

The Takeover Panel has now intervened. A series of daily sealed bids will be made over five days from tomorrow. Bidding can be cut short if neither party makes a revised offer. The winning bid will then be put to the shareholder vote.

Blind auctions are a rare occurrence. The last time the Takeover Panel stepped in to referee an auction was in 2018, when a two-year battle to buy Sky ended with a dramatic £30bn knockout bid from the US cable giant Comcast.

The scramble to acquire Vectura intensified over the weekend as Philip Morris offered 165p-a-share just 48 hours after Carlyle agreed a deal with the Vectura board at 155p.

Prior to that Vectura had recommended a 150p approach from Philip Morris, overturning its initial decision to back a 136p-a-share offer from Carlyle.

Anti-smoking campaigners criticised Vectura’s courtship by Philip Morris, which is seeking to move beyond tobacco products.

Philip Morris piled on the pressure on Sunday by attacking private equity’s record of short-termism.