Philip Morris extends deadline to seal a deal for UK’s Vectura amidst concerns

By: Ruchi Gupta
Ruchi Gupta
Ruchi takes fitness and maintaining a healthy lifestyle very seriously. During her spare time, she enjoys swimming, running, and… read more.
on Sep 16, 2021
  • If all falls in place, Philip Morris will seal a deal for UK's Vectura.
  • Voices from health groups opposing the deal grow louder.
  • The acquisition deal is valued at 1.1 billion-pound.

Amidst growing concerns against the acquisition, it is learned that Philip Morris (NYSE:PM) has extended the deadline for remaining stakeholders to give up their shares, which will allow the deal to go through. The company has extended the deadline for holders to tender shares to 30 September.

About the acquisition deal

Philip Morris manufactures cigarettes. Vectura (LON:VEC), on the other hand, is an asthma inhaler maker. The announcement of Philip Morris taking over Vectura raised eyebrows. According to reports in the media, Philip Morris is purchasing the London-listed inhaler maker as part of its long-term goal to develop smoke-free products. The company is also working on the lines of being a broader healthcare and wellness organization.

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Shareholders of Vectura have decided to part with 165 pence-per-share offered by Philip Morris. Close to 75% are backing the deal, which is valued at 1.1 billion-pound.

Voices opposing the deal grown louder

However, the idea has not gone down well with health groups who have voiced their opinion against the deal. Health groups like the British Lung Foundation and Asthma UK have questioned if it is alright for a tobacco group to own a company that provides health solutions to cure respiratory illnesses caused by smoking cigarettes.

Standing against the deal, Sarah Woolnough, Chief Executive of British Lung Foundation and Asthma UK, said:

“There’s now a very real risk that Vectura’s deal with big tobacco will lead to the cigarette industry wielding undue influence on UK health policy. We call on the government to stand by its commitment to the World Health Organization Framework Convention on Tobacco Control to prevent this happening.”

Meanwhile, Jacek Olczak, Chief Executive of Philip Morris, stated that the acquisition of Vectura is a part of the strategy to move Philip Morris ‘Beyond Nicotine.’

While Philip Morris has received the necessary regulatory clearances for the deal, the company has not yet received the required 75% of the shares needed to delist Vectura. Therefore, in a bid to give stakeholders of Vectura time to accept its proposal, the cigarette manufacturing company has extended the deadline to 30 September.

Danni Hewson, AJ Bell financial analyst, said:

“Phillip Morris isn’t ignoring the elephant; it’s making us all take a long hard look. Discomfort is good, it tends to deliver change, but care must be taken that the promised change does come and there are no detours on the journey.”

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