Woke washing Marlboro man’s bid for Vectura exposes ethical investing as a sham

Philip Morris’s bid for a company specialising in lung treatments threatens to expose funds’ claims to put morals before money

Private equity never gets to play the good guy – so you can’t blame buy-out giant Carlyle for milking the opportunity for all its worth as it seeks to succeed in the takeover battle for inhaler-maker Vectura.

Carlyle lead figure Simon Dingemans has presented the shoot-out with tobacco giant Philip Morris as a choice between right and wrong, which is more than a little rich when you consider the buy-out industry’s risible track record of prioritising profits above jobs and investment. It’s a bit like being asked to choose between the rack and the iron maiden.

Still, it says something about how objectionable Philip Morris’s £1bn offer is that Carlyle is able to present itself as a white knight. An attempt by one of the world’s biggest cigarette manufacturers to profit from the treatment of the same diseases that its products cause is right up there with the most cynical of marketing ploys.

In an era of empty company slogans and social purpose gibberish, Philip Morris’s attempt to position itself as an evolving “wellness” company, while still producing 700bn cigarettes a year, must rank as one of the most egregious examples of corporate woke-washing.

With Vectura’s ineffective board, led by chairman Bruno Angelici, wavering between the competing parties, it will fall to some of the City’s most influential investors to demonstrate their much-hyped ethical credentials and ensure that an outfit that makes three quarters of its $28bn (£20bn) annual turnover from tobacco sales doesn’t prevail.

What must Vectura’s 250 scientists, who surely got into healthcare because they care about health, make of proceedings? Or non-executive Per-olof Andersson in his lofty role as “workforce engagement representative”? Surely that’s one board member who is prepared to take a stand.

Britain’s big fund managers aren’t shy about flaunting their do-goodery when it suits them, rushing to claim the moral high ground at Boohoo over supply chain concerns and Deliveroo on workers’ rights but these are isolated examples that smack of easy, short-term PR victories.

Why has there been no opposition to the takeover siege of Morrisons on moral grounds? A sale of the supermarket chain to bunch of ruthless Wall Street investors has implications for jobs, investment and thousands of suppliers, many of them small, local businesses. Several major shareholders have expressed their dismay but only on the basis that the opening bid was too cheap. If the ethical, social, and governance brigade is to attain the credibility it needs to survive then it can’t afford to sit on the sidelines in major disputes of national interest. Either their investment decisions are governed by a set of firm principles or they’re not – but they can’t be allowed to pick and choose.

The tussle for Vectura will be the ultimate test. Philip Morris has tabled the more generous offer and Carlyle is refusing to go any higher, and it’s not as if private equity ownership doesn’t come with a long list of potential pitfalls.

Yet, for once the buy-out industry isn’t in the dock. It is the prospect of Big Tobacco owning a healthcare company that specialises in treating diseases caused by smoking that doctors, health charities and politicians are up in arms about.

And it’s not just the optics of such a deal that they object to. Some have warned that it could jeopardise the work that Vectura does with the NHS. But where is the objection from investors such as Blackrock, led by “purpose” cheerleader Larry Fink, or Legal & General, champion of “inclusive capitalism”? Both are top ten investors.

It’s a straight choice then. Shareholders must vote with their hearts, not their heads, and definitely not their lungs. If Philip Morris is allowed to triumph then the responsible investing movement threatens to be exposed as little more than a virtue-signalling wheeze.

‘It will fall to the City’s investors to demonstrate their muchhyped ethical credentials’

A deal could be on Deliveroo’s menu

Full marks to Deliveroo founder Will Shu for trying. A £300m share raid by rival Delivery Hero will have ruffled feathers but Shu is attempting to portray the move as an “endorsement” rather than a hostile act.

You can hardly blame him. With doubts persisting over the food app’s long-term prospects, Shu needs all the good news he can get right now.

It is tempting to wonder whether he cares much either way about the motives of its German counterpart despite the purchase of a 5pc stake that catapults it into seventh place on the shareholder register. After all, a controversial dual-class share structure means Shu has the power to block any takeover bid for the next three years.

Yet, that doesn’t necessarily make Deliveroo bid-proof. Delivery Hero could attempt a so-called “bear-hug”, a classic tactic in takeover situations whereby a bid is launched way above the current share price in an attempt to squeeze the target into acceptance – essentially an offer that can’t be refused. Even if Shu wanted to hold out, how easy would that be if early backers Amazon, Fidelity, and Index Ventures, and holders of a third of the stock, pushed hard for a deal?

Or perhaps it won’t come to that. If Deliveroo continues to struggle then Shu may be the one pushing for a merger. All good feasts start with an appetiser.