--Philip Morris International plans to buy Vectura Group as part of expansion beyond tobacco products

--Vectura board withdrew its recommendation of an earlier offer from Carlyle

--Carlyle said it is considering its options

By Adria Calatayud

Philip Morris International Inc. plans to buy Vectura Group PLC, a U.K. pharmaceuticals business specializing in inhaled medicines, for 899.2 million pounds ($1.24 billion) in cash, bolstering its push to expand beyond tobacco and nicotine.

Philip Morris International, which sells the Marlboro brand outside the U.S., on Friday said that Vectura will be the backbone of its inhaled-therapeutic business.

The move from the tobacco company trumps an earlier bid for Vectura by Carlyle Group Inc., which had been recommended by the board of the U.K. company in May. Philip Morris's offer values Vectura at 150 pence a share, 10% higher than Carlyle's bid.

In response, Carlyle said it is considering its options and encouraged Vectura shareholders to take no action.

Shares in Vectura at 0928 GMT traded 13% higher at 153.60 pence.

The offer from Philip Morris valued Vectura at GBP1.05 billion, or 169 pence a share, including a dividend of 19 pence a share the U.K. company paid in June.

Philip Morris said the acquisition of Vectura is part of its evolution into a broader healthcare and wellness company. Earlier this year, it outlined plans to generate more than half of its revenue from smokeless products by 2025, up from 24% in 2020, in a bid to court ethical investors.

Philip Morris said respiratory drug delivery and selfcare wellness products are key in its plans to move away from tobacco and nicotine and that Vectura's strengths can help it to tap into the fast-growing market for inhaled therapeutics.

"We see Vectura's combination of device, formulation and development capabilities for inhaled therapeutics as highly complementary to our existing expertise, pipeline and experience in aerosolization," Philip Morris Chief Executive Jacek Olczak said.

Vectura, based in Chippenham, England, will operate as an autonomous business unit within Philip Morris with support for its current strategy, the companies said. In 2019, the company changed its strategy to focus on providing contracted drug-development services for partners.

Analysts at brokerage Peel Hunt said Philip Morris's offer for Vectura reduces the likelihood of further bids from private-equity investors, as the U.K. company's plans to develop a contract development-and-manufacturing business are expected to take some time.

Write to Adria Calatayud at adria.calatayud@dowjones.com

(END) Dow Jones Newswires

07-09-21 0556ET