Philip Morris International Inc. agreed to buy UK asthma drug maker Vectura Plc Group for $ 1.2 billion, one of the biggest steps a tobacco company has ever taken to treat ailments its cigarettes can help cause.

Philip Morris is offering 150 pence in cash for each Vectura share, the companies said in a statement. That’s 11% higher than Thursday’s closing price, and beats an offer of Carlyle Group Inc. that management had accepted in May. Vectura stock rose 13%, trading above the new offering.

Carlyle said he is considering his options and will make another announcement later, raising the prospect of a buyout battle with the tobacco company. The private equity firm urged shareholders to do nothing.

As more and more people in the developed world quit smoking to improve their health, Philip Morris has focused his investment on IQOS heated tobacco devices. In an attempt to establish benchmarks in health, the CEO Jacek Olczak is also targeting at least $ 1 billion in non-nicotine sales by 2025.

Philip Morris has the right to sell Marlboro cigarettes outside the United States, having been formed when Altria Group Inc. separated from its international operations in 2008. The company has injected more than $ 8 billion into alternatives to tobacco such as IQOS, which has become one of the most popular products among smokers. The cigarette maker predicted that its main product would someday no longer exist.

Earlier this month, PMI announced the $ 820 million acquisition of Fertin Pharma, a manufacturer of nicotine chewing gum and oral pain medication. Other products in development aim to boost energy or promote sleep.

Vectura, founded in 1997, manufactures inhalers and nebulizers, which allow patients to inhale medication in the form of a mist, either through a mouthpiece or a mask. Customers included Novartis AG and GlaxoSmithKline Plc, and Vectura’s 13 inhalable drugs on the market have generated more than $ 11 billion in total sales since 2012.

Philip Morris wants Vectura to continue working with its pharmaceutical customers and also develop new products with Philip Morris, CEO Olczak said by phone.

“This is not an acquisition that I can match with anything I have at PMI,” said Olczak. “Both Fertin and Vectura offer us the possibility of doubling our products. If we were to develop our own products organically it would be doable, but it would take time. We cannot lose our focus.

Vectura has more than 200 scientists specializing in formulation, devices, inhalation, regulatory teams and clinical manufacturing. In January, the company hired former Sanofi executive Jorge Insuastie as director of life sciences to stimulate the development of new products.

Philip Morris’s expansion into businesses other than tobacco may offer some protection against regulatory threats. Juul Labs Inc. awaits a decision from the US Food and Drug Administration on the possibility of continuing to sell its products. Separately, British American Tobacco Plc has sued Philip Morris for patents, which could lead to an import ban on IQOS heated tobacco sticks into the United States.

Some Vectura products are very similar to electronic cigarettes. Bayer AG and Vectura have introduced an inhaler called the Fox Nebulizer which can deliver Bayer medication for high blood pressure to the lungs.

The company is also exploring inhalation as a way to treat non-respiratory illnesses such as pulmonary vascular disease, postpartum bleeding, cancer, and Covid-19.

Vectura said the deal is valued at $ 1.5 billion, including a recent dividend payment.

BofA Titles advised Philip Morris. JPMorgan Cazenove and Rothschild & Co. are by Vectura advisers. Carlyle has hired Morgan stanley and RBC Capital Markets.


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