No Auction After Carlyle Declares Bid Final

The takeover battle between Philip Morris International and private equity firm Carlyle Group for the British inhaled treatments maker Vectura will avoid an auction sale after Carlyle declared its £958 million ($1.33 billion) bid final, reports Reuters.

On July 9, PMI offered £852 million for Vectura as part of the company’s ambition to leverage its expertise in inhalation and aerosolization into adjacent areas.

The Carlyle Group then raised an earlier offer to £958 million. Carlyle had struck an agreement to buy Vectura in May until PMI emerged with its offer in July.

In response, PMI raised its offer to £1.02 billion while stressing that Vectura would operate as an autonomous business unit under its umbrella.

The bidding war prompted Britain’s takeover regulator to intervene, saying that it would enter a rare head-to-head auction here if the bidders did not make final bids by Aug. 10.

PMI’s bid unleashed a storm of criticism from public health advocates who dislike the idea of a tobacco company investing in the lung health business.

The Vectura directors on Friday acknowledged reports of uncertainties relating to the possible impact on Vectura stakeholders if the company were owned by PMI.

Founded in 1997, Vectura makes inhalers and nebulizers, which enable patients to breathe in medication as a mist, either through a mouthpiece or a mask. Its customers have included Novartis and GlaxoSmithKline.

PMI is counting on Vectura to help achieve its goal of at least $1 billion in sales outside nicotine by 2025. Its $820 million acquisition of Fertin Pharma, a maker of nicotine chewing gum and oral drugs for pain, gives the company expertise in oral deliveries, but it would take Philip Morris longer to develop inhaled therapies without Vectura.

A deal with either one of the U.S. companies would require shareholder approval.