Private equity update
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On Sunday, as Philip Morris International raised its bid to more than £1 billion, the struggle between Marlboro cigarette owners and a private equity group for control of British inhaler manufacturer Vectura intensified.
PMI’s offer of 165 pence per share was made two days after the announcement by the U.S. private equity group Carlyle Increased his bid For Vectura in Wiltshire, earnings per share were 155 pence.
This proposal won the support of Vectura’s board of directors and a group of investors who own 11.2% of Vectura, including Axa Investment Managers. PMI’s offer valued Vectura’s equity at 1.02 billion pounds, while Carlyle’s valuation was 928 million pounds.
The bidding war for Vectura is taking advantage of the low valuation of Brexit and the pandemic as private equity firms launched the biggest attack on UK listed companies in decades. In the first half of this year, PE bidding for London-listed companies was the fastest in 20 years.
Last Friday, the US private equity group Fortress Increase quote Wm Morrison’s acquisition amounted to nearly 10 billion pounds, thereby increasing its control of one of the UK’s largest supermarket chains.
SoftBank’s Fortress raised its offer a few days before the critical deadline for the bids of competitors of the acquisition group Clayton, Dubilier & Rice. According to the current timetable for the Morrison transaction, CD&R must decide by Monday whether to bid higher than Fortress or leave.
In another recent private equity raid, TDR Capital and billionaire brothers Mohsin and Zuber Issa acquired rival supermarket chain Asda from Wal-Mart at an amazing price. £6.8 billion deal. Listed groups, from infrastructure company John Laing to power supplier Aggreko, have also received attention from the industry.
The latest bid in the battle for Vectura is also accompanied by increasingly sharp rhetoric among potential buyers.
In the broad aspect of the private equity model, companies are usually sold again within about five years after the acquisition, and PMI stated that its own strategy is “driven by long-term commitments to its business transformation, rather than seeking short-term-long-term gains and efficiencies”.
Carlyle said on Friday that at the time of its offer of 155 pence, Vectura’s directors were aware of “the uncertainty reported by the impact on Vectura’s wider stakeholder because the company may be owned by PMI.”
PMI’s efforts to acquire Vectura have been criticized by anti-smoking campaigners. Vectura develops drugs and devices to help solve respiratory problems.
PMI has been trying to diversify its so-called “beyond nicotine” products, and said on Sunday that the purchase of Vectura will be part of this strategy.
PMI CEO Jacek Olczak said last month that the Marlboro cigarette brand will Disappeared from the British shelves Within 10 years.
Vectura’s stock price closed at just below 164 pence on Friday, higher than Carlyle’s offer level, indicating that shareholders may have been expecting the bidding war to continue. The healthcare group generated 190.6 million pounds of revenue in 2020, an increase of 7% over the previous year.
This is the latest development in the months-long struggle between competitors. Carlyle offered 136 pence per share in May, and PMI offered 150 pence last month.
Vectura and Carlyle declined to comment.
The private equity group has been stepping up its attempts to acquire European healthcare companies. Last year, it hired former GlaxoSmithKline chief financial officer Simon Dingemans to oversee British acquisitions and healthcare transactions across the region.