Philip Morris To Buy UK Drug Company Vectura For $1.2B As Part Of 'Beyond Nicotine' Push

Marlboro cigarette maker Philip Morris International Inc. PM announced Friday a deal that would give a further thrust to its "Beyond Nicotine" strategy.

The Philip Morris-Vectura Deal Terms: New York-based Philip Morris said it has agreed with the board of Vectura Group plc VEGPF regarding an all-cash offer to buy the latter for an enterprise value of 852 million pounds or $1.2 billion.

Each of Vectura shareholders will receive 150 pence per share in cash, a 46% premium to the ex-dividend closing price of Vectura stocks on the London Stock Exchange on May 25.

Vectura is a U.K.-based contract development and manufacturing company (CDMO) providing inhaled drug delivery solutions to its biopharma partners so they can bring their medicines to the market.

The company currently has 13 inhaled and 11 non-inhaled products marketed by major global pharma companies. Additionally, Vectura has a diverse portfolio of partnerships for drugs in clinical development.

Vectura generated revenues of about $245 million in 2020.

Related Link: Stock Wars: Altria Group Vs. Philip Morris International

The Philip Morris-Vectura Deal Logic: Philip Morris said it expects the deal to provide it access to differentiated proprietary technology and pharmaceutical development expertise to deliver a broad range of complex inhaled therapies.

"Together, the companies can create a fully-owned pipeline of products across a broad range of sectors in the prescription drug and over-the-counter (OTC) categories that will complement Vectura's CDMO business and service to its existing client base," Philip Morris said.

It is seen as a win-win proposition as Philip Morris' "Beyond Nicotine" aerosolization technologies and development pipeline are expected to provide additional predictability, stability and security for Vectura's future.

In February, Philip Morris announced its goal to generate more than 50 percent of its total net revenue from smoke-free products by 2025. The company also announced its aim to generate at least $1 billion in net revenues by 2025 from "Beyond Nicotine" products.

Earlier this month, Philip Morris announced a deal to buy Fertin Pharma, a developer and manufacturer of pharmaceutical and well-being products based on oral and intra-oral delivery systems, for an enterprise value of about $820 million.

At last check, Philip Morris shares were up 1.36% at $99.64 and Vectura was rallying 4.81% to $2.18.