Inhaler maker Vectura poised to fall to Big Tobacco as bidding war collapses

Vectura (VEC.L), the FTSE 250-listed (^FTMC) maker of medical inhalers, looks set to be taken over by cigarette maker Philip Morris International (PM) after rival bidders The Carlyle Group (CG) said it wouldn't up its offer for the business.

Carlyle said that it would not be increasing the 155p-a-share offer it made for Vectura last Friday in a statement released after markets closed in Europe on Tuesday. Carlyle said its 155p-a-share bid was "full and fair", and therefore "final".

The withdrawal means Marlboro-maker Philip Morris is the highest bidder for Vectura. PMI trumped Carlyle's bid on Sunday with a 165p-a-share offer. A planned auction between Carlyle and PMI for Vectura was called off last night after Carlyle's offer.

Read more: Vectura shares surge amid bidding war between Philip Morris and Carlyle

PMI's bid is highly controversial, given that the company makes cigarettes and Vectura specialises in healthcare products. Politicians and health bodies have publicly spoken out against the deal and Vectura's board has been forced to admit that the takeover could prove detrimental.

Carlyle is still lobbying Vectura shareholders to accept its lower offer on stewardship groups.

"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," Simon Dingemans, a managing director in Carlyle's European buyout advisory group, said.

PMI has argued that Carlyle would pursue short-term profits at the expense of long-term investment because it is a private equity group. PMI has promised to invest significant sums in R&D at Vectura and run the company on an arm's length basis if its bid is successful. The acquisition is part of PMI's stated ambitions to shift its business away from tobacco and towards a "smoke free future".

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PMI now has until 5pm on Thursday 12 August to return with any final offer. Vectura said on Wednesday morning its board would "make a further announcement following the expiration of the above deadline or, if sooner, following any announcement by PMI of a revised offer or an announcement that its offer will not be increased further."

Shares in Vectura slipped 0.4% at the open in London to trade at 162.6p, as the prospect of a bidding war for the company faded.

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