Inching closer to buyout, Philip Morris grabs stake in respiratory specialist Vectura as health groups push back

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Marlboro maker Philip Morris has largely swayed Vectura in its bid to acquire the U.K.-based inhalation specialist. The tobacco giant just firmed up its position ahead of the deal’s Sept. 15 deadline, too. Outside Vectura, though, resistance to the proposed takeover is mounting.

Philip Morris has picked up a 22.61% stake in Vectura, MarketWatch and others reported Wednesday. The tobacco giant said it has bought 135.5 million Vectura shares at 165 pence ($2.27) a pop—which tracks with its latest offer for the company. The current buyout offer, should it go through, would see Philip Morris pay about £1.1 billion ($1.5 billion) for Vectura.

But as Philip Morris and Vectura plow ahead with their plans, asthma and lung-minded health groups are raising alarms.

“The proposed deal should make no business sense to shareholders who have invested in a company that makes treatments for people with lung diseases, as many of these diseases are directly caused by smoking,” Alison Cook, director of external affairs at Asthma UK and the British Lung Foundation, said in an emailed statement.

If the buyout goes through, Vectura could be “cold shouldered” by the health and research community, she added. That wouldn’t just be bad for patients—it could hurt Vectura’s business, too, she said.

RELATED: Vectura, after reinventing itself as a CDMO, accepts $1.4B buyout offer from Carlyle

Separately, a slate of health organizations, experts and anti-smoking charities recently penned (PDF) an open letter to Vectura’s board asking them to reject the deal. The letter included Asthma UK and the British Lung Foundation among its signatories.

The bulk of Vectura’s revenue comes from making drugs to treat smoking-related diseases like chronic obstructive pulmonary disease, the letter points out. If Philip Morris acquires the company, it “could then profit from treating the very illnesses that its products cause,” it added.

Philip Morris is pursuing the deal as part of its “Beyond Nicotine” strategy. The company also recently laid out $5.1 billion Danish krone ($813 million) for oral drug delivery specialist Fertin Pharma, which makes a range of delivery technologies, including chewing gums used to administer nicotine.

Under Philip Morris' current takeover approach, the company needs to persuade holders of a little more than 50% of Vectura shares to agree to the deal. With its fresh 22.61% stake in the company, Philip Morris is nearly halfway there. It’s telegraphed its intent to snap up more shares at the same price, MarketWatch said.

Vectura shareholders have until mid-September to decide whether to tender their shares to Philip Morris.

RELATED: Vectura's $1.45B sale to tobacco giant Philip Morris under fire from British business secretary: report

Philip Morris’ stake purchase comes about a week after Vectura’s board backed the tobacco company’s offer, sending another would-be bidder, The Carlyle Group, packing. Healthcare investment firm Carlyle had locked in its final offer at 155 pence a share, which would have valued the company at about 958 million British pounds ($1.3 billion).