Shareholders in the asthma inhaler maker Vectura have been urged to reject a £1.1bn takeover by the tobacco company Philip Morris International (PMI), in an open letter signed by 35 health charities, public health experts and doctors from around the world.
Investors in the Wiltshire-based respiratory medicine specialist have until 15 September to decide whether to sell their shares to PMI, which has touted its ambitions for a “smoke-free” future but still derives 75% of its revenue from cigarettes.
Vectura’s board members have already recommended that investors accept the offer, which surpassed an earlier £958m bid from US private equity group Carlyle, pointing to PMI’s ability to fund research and development.
But signatories of the open letter written directly to shareholders, led by Asthma UK and the British Lung Foundation, warned the company’s investors that accepting PMI’s money would “significantly hamper Vectura’s ability to continue operating as a viable, research-oriented business”.
They warned that Vectura may lose access to government grants due to a UN tobacco control treaty under which 180 countries agreed to curb the influence of the tobacco industry on health policy.
Distaste for ownership by a tobacco firm could also sever crucial ties between Vectura and the medical community, the signatories said.
“Many university and hospital collaborations are likely to be rejected and participation in clinical trials blocked, disrupting crucial drug development – one of Vectura’s major business activities,” it said. “A takeover by PMI is therefore likely to cause significant disruption to Vectura’s operations and future profitability for its shareholders.”
The signatories also warned that Vectura’s ability to publish research in medical journals and attract talented staff could be diminished.
They asked Vectura shareholders “to consider both the business risks and the moral conflict of the proposed takeover. Tobacco companies should not profit from treating the illnesses their products cause.”
The company’s main shareholders are a series of American investment funds. The largest, with a 6.7% stake, is Brown Capital Management, a Baltimore firm with $18bn (£13bn) assets under management. Started in the 1980s by Eddie Brown, it is one of the oldest African American-founded asset management companies in the US.
None of the individual funds at the top of Vectura’s shareholder list appear to screen out tobacco, although the fund management companies behind them offer other products targeted at ethical investors.
The shadow health secretary, Jonathan Ashworth, has previously called on the government to block the takeover.
