(Bloomberg) -- Philip Morris International Inc is selling Vectura Group Ltd. for roughly a third of the price it paid for the UK maker of asthma inhalers about three years ago.
The tobacco company said Tuesday that electronics company Molex Asia Holdings has agreed to pay £150 million ($198 million) cash upfront, with the potential for deferred further payments of up to £148 million.
It comes about three years after the maker of Marlboro cigarettes won a bidding war to buy Vectura, which makes treatments for respiratory illnesses caused or worsened by smoking, for about $1.2 billion. At the time, the deal was criticized by scientific organizations, academics, health charities, and anti-smoking campaigners who said Big Tobacco should not benefit from a company whose products are used by health systems including Britain’s National Health Service.
PMI had hoped that Vectura would accelerate its move away from cigarettes and help it meet a target of growing revenues from smoke-free products. Instead the company said it will now take a loss of $220 million on the sale in the third quarter.
The sale will release Vectura from the “unreasonable burden of external constraints and criticism related to our ownership,” Jacek Olczak, chief executive officer of PMI, said in a statement.
Vectura is part of a “health and wellness” unit that also includes Fertin Pharma, the producer of a smoking-cessation aid, that PMI bought for about $820 million in 2021. Last year, PMI took a $680 million impairment charge on the unit after some unsuccessful clinical trials and slower-than-expected development of other products.
Selling Vectura will allow PMI to “rid itself of a financially struggling unit,” said Kenneth Shea, a Bloomberg Intelligence analyst. “But it also represents a strategic backpedal to the company’s once-bold ambition to serve the inhaled therapeutics medical market,” he added.
Following the sale to Molex — whose Phillips-Medsize business will operate Vectura — the remaining parts of PMI’s health and wellness unit will continue to operate as a separate company. The unit will be given a “new corporate identity”, said PMI, and will focus on developing and commercializing oral consumer health and wellness and inhaled prescription products for areas that include pain management and cardiovascular emergencies.
Shares of PMI were little changed in early trading in New York. The stock is up more than 28% in the last 12 months.
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