Carlyle Europe Partners V, a fund managed by The Carlyle Group Inc. (NasdaqGS:CG) agreed to acquire Vectura Group plc (LSE:VEC) for approximately £830 million on May 26, 2021. Carlyle will acquire all the issued shares for £1.36 per share in cash. An interim dividend of £0.19 per share will also be paid by Vectura to its shareholders with a record date of May 28, 2021, in lieu of the proposed special dividend of £0.19 per share and share consolidation resolutions which were subject to shareholder approvals and which will now be withdrawn. The acquisition is to be affected by means of a scheme of arrangement. On August 6, 2021, agreement was reached to increase cash offer at a purchase price of £1.55 per share, Increased Offer values Vectura at approximately £958 million. Increased Offer is superior to the PMI Offer on price and timing. The cash consideration will be funded from a combination of equity to be invested indirectly by The Carlyle Group and debt to be provided pursuant to an interim facilities agreement that has been arranged by Royal Bank of Canada. Carlyle is providing the cash consideration payable under the increased offer from a combination of equity to be invested indirectly by The Carlyle Group pursuant to a revised equity commitment letter and debt to be provided pursuant to an interim facilities agreement that has been arranged by Royal Bank of Canada. It has been agreed with Royal Bank of Canada that in the event of a switch to a takeover offer, it will not reduce the acceptance condition to below 75% without their prior approval. On completion, applications will be made for the cancellation of the listing of Vectura shares on the official list and the cancellation of trading of the Vectura Shares on the main market of the London Stock Exchange. Post-completion, each of the non-executive members of the Vectura Board shall resign from his or her office as a Director of Vectura.

The transaction is subject to the approval of the scheme by a majority in number of the Vectura Shareholders who are present and vote at the Court Meeting, either in person or by proxy, and who represent 75% or more in value of the Vectura Shares voted by those Vectura Shareholders; the approval by Vectura Shareholders of the resolutions relating to the acquisition representing at least 75% of votes cast at the General Meeting; the sanction of the Scheme by the Court; the delivery of a copy of the Court Order to the Registrar of Companies; none of the Dividend Related Resolutions being approved by Vectura Shareholders; the satisfaction or waiver of the UK National Security and Investment Condition, the French Foreign Investment Condition and the German Foreign Investment Condition; and approval under the respective merger control rules by the Competition and Consumer Protection Commission of the Republic of Ireland and the Japanese Fair Trade Commission being obtained. The Vectura Directors intend to recommend unanimously that Vectura Shareholders vote in favor of the Scheme at the Court Meeting and the resolutions to be proposed at the Vectura General Meeting. Vectura Directors, Bruno Angelici, Thomas Werner, Per-Olof Andersson, Juliet Thompson, Kevin Matthews, and Will Downie have irrevocably undertaken to vote in favour of the transaction representing approximately 0.1% shareholding. As reported on June 1, 2021, the amount of the cash consideration payable under the offer was determined with reference to Vectura's existing share capital prior to the share consolidation, but after payment of the special dividend. Due to the fact that the resolutions to approve the special dividend and the share consolidation are inter-conditional, it was not possible to proceed with one, and not the other, so the Board resolved to withdraw their recommendation of the special dividend. Considering this, Will Downie, who chaired the general meeting opened the meeting and immediately withdrew all the resolutions without putting them to vote and adjourned the general meeting indefinitely. The acquisition is expected to become effective during the third quarter of 2021 with a long stop date of November 26, 2021. On June 24, 2021, Bidco entered into an updated Arrangement Fee Letter between Barclays Bank PLC, Mizuho Bank, Ltd., NatWest Markets PLC, and Royal Bank of Canada, in each case, in their capacities as Mandated Lead Arranger and Underwriter, and an updated Interim CP Satisfaction Letter was delivered by the Interim Facility Agent. As of July 12, 2021, the Board of Vectura had withdrawn its recommendation of the offer made by Carlyle and that it intends unanimously to recommend the offer made by PMI Global Services Inc. On August 4, 2021, the parties agreed to extend the dates by when the conditions relating to holding the Court Meeting and the Vectura General Meeting must be satisfied to August 24, 2021. On August 6, 2021, Carlyle received irrevocable undertakings in relation to voting in favor of the Scheme at the Court Meeting and the resolutions to be proposed at the Vectura General Meeting from AXA Investment Managers UK Limited, TIG Advisors, LLC and Berry Street Capital Management LLP in respect of a total of 67.133 million, representing 11.2%. As of August 6, 2021, board of Vectura Group plc recommends its shareholders to accept the revised Offer. On August 8, 2021, PMI Global Services, Inc. offer price increased to £1.65 per share and the deal turned into hostile. As of August 10, 2021, Carlyle considers the financial terms of its £1.55 per share offer, as full and fair. Accordingly, Carlyle has decided that the financial terms of its offer will not be increased and are now final. As a result, the proposed auction procedures will not be implemented. As on August 12, 2021, the Board of Directors Vectura unanimously recommended the increased offer price by PMI to its shareholders. Vectura Directors do not intend to reconvene the shareholder meeting and intend to adjourn the shareholders.

Vectura Directors also noted the reported uncertainties relating to the impact on Vectura's wider stakeholders arising as a result of the possibility of Vectura being owned by PMI. In assessing the relative merits of cash offers from Carlyle or PMI, Carlyle encourages shareholders to consider the broader context and the impact of each offer on the Company and its wider stakeholders in determining which offer to support. Shareholders should note that Carlyle has all the approvals it has been seeking from regulators and therefore the only approvals now actively required by Carlyle to completion are Vectura shareholder approvals and sanction by the Court. On August 27, 2021, Carlyle waived the deadline for the timing of the Court Meeting and Vectura General Meeting.

Anthony Zammit, Siddhart Nahata and Andrew Foster of Morgan Stanley & Co. International plc acted as lead financial advisor, and Thomas Stockman, Alexander Thomas and Mark Rushton of RBC Europe Limited acted as financial advisor to The Carlyle Group. James Mitford, Celia Murray, and Alex Bruce of J.P. Morgan Securities plc acted as joint financial advisor and join corporate broker, Julian Hudson, Vincent Meziere, and Toby Wright of N.M. Rothschild & Sons Limited acted as joint financial advisor, and James Black of Numis Securities Limited acted as joint corporate broker to Vectura. Carlton Evans of Linklaters LLP, Luca Crocco and Marc Williamson of Latham & Watkins LLP, and Sean Seelinger of Ropes & Gray LLP acted as legal advisors to The Carlyle Group. Joel Ziff and James Bole of Clifford Chance LLP acted as legal advisor to Vectura. Computershare Investor Services Plc acted as registrar to Vectura. Karen Davies and Tim Rennie of Ashurst acted as legal advisors to Morgan Stanley.