Major funds join sell-off as Marlboro-maker Philip Morris takes control of Vectura

·2-min read
Marlboro billboard in Monte Carlo  (PA)
Marlboro billboard in Monte Carlo (PA)

Two giant investment funds have declared they are offloading multi-million pound stakes in Vectura following the health firm’s takeover by Philip Morris International.

In a strongly worded statement, Axa Investment Managers said it was selling its entire 3.9% holding, worth around £44 million, citing discomfort over the ethics of the deal.

The French-owned fund, which manages more than £750 billion, had publicly thrown its weight behind a rival bid for the FTSE 250 health firm from US private equity group Carlyle.

Legal & General Investment Managers also declared it is tendering its 3.7% holding, valued at £40million, having spent “considerable time reviewing the competing ESG factors and financials” surrounding the the Marlboro cigarettes maker’s acquisition.

PMI yesterday announced it had effectively taken control of Vectura, which manufactures products used in the treatment of respiratory illnesses caused by smoking, after a highly controversial £1.1 billion bidding war.

It now controls just under 75% of the shares, having bought a 29% stake on the open market and received acceptances from 45.6% of investors.

The latest sales, once processed, are expected to lift its stake above the 75% threshold needed to de-list its target.

If PMI secures more than 90% of acceptances it can then “squeeze out” the remaining minority shareholders.

PMI’s boss Jacek Olczak has said the acquisition is a major step in its shift to diversify from tobacco to health and wellness products.

Axa today joined critics, which include leading medical charities, in finding the alliance “uncomfortable”.

It said: “We fully understand the need for companies such as PMI to find paths to transition away from their high polluting and harmful products, however, we were uncomfortable with the ethics behind a tobacco group’s purchase of an inhaler manufacturer.”

LGIM, one of the UK’s largest asset managers, said: “During this highly sensitive process we came to the conclusion that the sale of our shares was the optimal result for our clients, investors and the futures of both companies.

“LGIM has consistently engaged with PMI to encourage the firm to diversify its interests away from tobacco.

“We will continue to monitor, engage and hold the PMI board to account.”

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