Vectura auction is called off after Carlyle decides not to raise bid

A TAKEOVER auction for Vectura has been scrapped at the 11th hour after one of the drugmaker’s suitors declared that it would not increase its bid.

American private equity firm Carlyle declared that its 155p-a-share offer for Vectura is final on the eve of a five-day auction against rival bidder Philip Morris International (PMI), the tobacco titan behind Marlboro cigarettes.

Carlyle’s decision creates a dilemma for Vectura’s board, led by chairman and 20-year Astrazeneca veteran Bruno Angelici, as directors consider which bid to recommend to shareholders.

Philip Morris’s offer is higher at 165p per share, but its swoop on a business behind an array of drugs used to treat smoking-related diseases has already sparked an outcry and is likely to face heavy political scrutiny. The takeover panel, the City’s acquisitions referee, was gearing up for a series of sealed bids for Vectura that would value the FTSE 250 business in excess of £1bn.

Philip Morris now has until tomorrow evening to sweeten its bid if it so wishes. Earlier yesterday, the tobacco giant adjusted its bid, reducing the required shareholder support from 75pc to a simple majority. Shares in Vectura fell 5pc to 163.4p.

Simon Dingemans, a Carlyle managing director, said: “Carlyle believes its offer is in the best interests of the business and its stakeholders, including its employees, partners and customers, as well as, most importantly, the patients it serves and helps to provide with effective and accessible medicines.”

The battle to buy Chippenham-based Vectura has gripped the City for weeks.

In one corner is one of the world’s pre-eminent private equity funds, known for cut-throat deals that generate large returns for its investors.

Swiss-based Philip Morris, a $150bn (£108bn) behemoth, stands in its way. The tobacco giant has called for a ban of cigarettes in as little as 10 years with claims that it will diversify into a “wellness company”.

A backlash from anti-smoking campaigners appears to have influenced the Vectura board, which last week noted “the reported uncertainties relating to the impact on Vectura’s wider stakeholders” caused by a previous decision to back a lower offer from Philip Morris before the bidding war intensified.

Vectura is at risk of being ostracised by the pharma industry if it accepts the higher offer from “Marlboro Man”.

Bosses withdrew their recommendation on Monday ahead of the expected auction.

Philip Morris, however, has preyed on the narrative that private equity firms look for short-term gains from their investments.