NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION OTHER THAN THE UNITED KINGDOM WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

FOR IMMEDIATE RELEASE

16 August 2021

RECOMMENDED FINAL CASH OFFER

for

Vectura Group plc ("Vectura")

by

PMI Global Services Inc. ("PMI Bidder")

a wholly owned direct subsidiary of Philip Morris International Inc. ("PMI")

Publication and posting of Offer Document

Summary

·              On 9 August 2021, the Takeover Panel announced a competitive situation for the purposes of Rule 32.5 of the Takeover Code existed in respect of Vectura, PMI Bidder and Murano Bidco Limited ("Murano"), and accordingly established an auction procedure be followed from 5.00pm (London Time) on Tuesday 10 August 2021 (the "Auction Rules").

·              On 10 August 2021, Murano announced that their offer to acquire all of the issued and to be issued ordinary shares of Vectura ("Vectura Shares") for 155 pence per ordinary share of Vectura ("Vectura Shares") announced on 6 August 2021 was their final offer ("Final Carlyle Offer"). Under the Auction Rules, PMI and PMI Bidder had until 5.00 pm on Thursday 12 August 2021 to increase their offer of 165 pence per Vectura Share made on 8 August 2021 ("Offer").

·              On 12 August 2021, (and as PMI Bidder did not make an announcement prior to 5.00pm on 12 August 2021, the Offer was deemed to be PMI Bidder's final offer for Vectura), the Vectura Directors announced their intention to recommend the Offer (which is being implemented by way of a Takeover Offer).  Further the Vectura Directors announced that they did not intend to reconvene the shareholder meetings required in relation to the approval and implementation of the Final Carlyle Offer (which is structured as a scheme of arrangement).

·              Accordingly, the boards of PMI, PMI Bidder and Vectura announce that the offer document ("Offer Document") is today being published with a form of acceptance ("Form of Acceptance").  In addition to being published and sent to Vectura Shareholders today, the Offer Document and the Form of Acceptance will be made available on PMI's website at www.PMI.com and on Vectura's website at www.Vectura.com.

·              PMI intends to acquire Vectura Shares in the market from eligible shareholders outside the United States at up to and including 165 pence in cash for each Vectura Share.

·              Eligible Vectura Shareholders who are institutional investors outside the United States interested in selling their Vectura Shares to PMI should contact BofA Merrill Lynch Corporate Broking at dg.corporate_broking_trading@bofa.com. Retail investors should contact their broker.

·              Due to regulatory requirements, PMI is unable to purchase Vectura Shares in the market (i.e., other than pursuant to the Offer) from shareholders incorporated or located in the United States, or where the Vectura Shares would be sold from the United States. Any purchases will be made to the extent permitted by, and in compliance with, the exemptive relief granted by the SEC from Rule 14e-5 under the U.S. Exchange Act and in compliance with the City Code.

Terms of the Offer

·              Under the Offer, Vectura Shareholders shall be entitled to receive:

·              The Offer is a significant premium to the Final Carlyle Offer and values the entire issued and to be issued share capital of Vectura at approximately £1.02 billion and represents a premium of approximately:

o     10 pence per share to the price of 155 pence per Vectura Share that Vectura Shareholders would be entitled to receive under the Final Carlyle Offer;

o     71 per cent. to the volume weighted average Ex‑Dividend Closing Price of 97 pence per Vectura Share for the 3 months ended 25 May 2021 (being the last Business Day prior to the commencement of the offer period);

o     69 per cent. to the volume weighted average Ex‑Dividend Closing Price of 98 pence per Vectura Share for the 1 month ended 25 May 2021 (being the last Business Day prior to the commencement of the offer period); and

o     60 per cent. to the Ex‑Dividend Closing Price per Vectura Share of 103 pence per Vectura Share on 25 May 2021 (being the last Business Day prior to the commencement of the offer period).

·              The Offer, together with the Interim Dividend paid during the Offer Period, represents an aggregate value of approximately £1.1 billion for the entire issued and to be issued ordinary share capital of Vectura.

Commenting on the Offer, Jacek Olczak, PMI's Chief Executive Officer said:

"PMI's acquisition of Vectura is part of our long-term strategy to transform PMI by investing in scientific excellence and leveraging its capabilities and expertise. Our investment will accelerate the development and delivery of inhaled therapeutics to address many of today's unmet medical needs. We look forward to working with Vectura's great people as we embark on the next stage of our transformation."

·              The full terms and conditions to the Offer, along with an expected timetable of principal events, are set out in the Offer Document.

Terms capitalised but not defined in this announcement have the meanings given in the Offer Document.

Action to be taken

The Offer will remain open for acceptance until 1:00 p.m. (London time) on 15 September 2021. To accept the Offer, it is important that you follow the instructions set out in Sections C, D and/or E of Part 2 of the Offer Document and, in respect of certificated Vectura Shares, as further described in the Form of Acceptance.

If you require assistance, please telephone Computershare, who are acting as receiving agent, by telephone between 8.30 a.m. and 5.30 p.m. Monday to Friday (excluding UK public holidays) on (0) 370 707 1387 from within the UK (or on +44 (0) 370 707 1387 if calling from outside the UK).

Enquiries:

DLA Piper UK LLP is retained as legal adviser to PMI and PMI Bidder. 

Clifford Chance LLP is retained as legal adviser to Vectura. 

Important Notices

Merrill Lynch International ("BofA Securities"), a subsidiary of Bank of America Corporation, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority (''PRA'') in the United Kingdom, is acting exclusively for PMI in connection with the matters set out in this announcement and for no one else and will not be responsible to anyone other than PMI for providing the protections afforded to its clients or for providing advice in relation to the subject matter of this announcement or any other matters referred to in this announcement.

J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United Kingdom by the PRA and regulated in the United Kingdom by the PRA and the Financial Conduct Authority (''FCA'').  J.P. Morgan Cazenove is acting as financial adviser and corporate broker exclusively for Vectura and no one else in connection with the Offer and will not regard any other person as its client in relation to the Offer and will not be responsible to anyone other than Vectura for providing the protections afforded to clients of J.P. Morgan Cazenove or its affiliates, nor for providing advice in relation to the Offer or any matter referred to herein.

N.M. Rothschild & Sons Limited ("Rothschild & Co"), which is authorised and regulated by the FCA in the United Kingdom, is acting exclusively for Vectura and for no one else in connection with the subject matter of this announcement and will not be responsible to anyone other than Vectura for providing the protections afforded to its clients or for providing advice in connection with the subject matter of this announcement or any matter referred to herein.

Numis Securities Limited ("Numis"), which is authorised and regulated in the United Kingdom by the FCA, is acting exclusively for Vectura and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than Vectura for providing the protections afforded to clients of Numis, nor for providing advice in relation to any matter referred to herein.

Further Information

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the Offer or otherwise.

The Offer shall be made solely by means of the Offer Document (or, if the Offer is implemented by way of a scheme of arrangement, the scheme document) which, together with the Form of Acceptance (or forms of proxy), shall contain the full terms and conditions of the Offer, including details of how to vote in respect of the Offer.

This announcement has been prepared for the purpose of complying with English law and the Takeover Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside England and Wales.

Vectura and PMI Bidder shall prepare the Offer Document to be distributed to Vectura Shareholders.  Vectura and PMI Bidder urge Vectura Shareholders to read the Offer Document when it becomes available because it shall contain important information relating to the Offer.

This announcement does not constitute a prospectus or prospectus exempted document. 

Overseas Shareholders

The release, publication or distribution of this announcement in or into certain jurisdictions other than the United Kingdom may be restricted by law.  Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

Unless otherwise determined by PMI Bidder or required by the Takeover Code, and permitted by applicable law and regulation, the Offer shall not be made available, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction and no person may vote in favour of the Offer by any such use, means, instrumentality or form within a Restricted Jurisdiction or any other jurisdiction if to do so would constitute a violation of the laws of that jurisdiction.  Accordingly, copies of this announcement and all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions where to do so would violate the laws in that jurisdiction.

The availability of the Offer to Vectura Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident.  Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

The Offer shall be subject to the applicable requirements of the Takeover Code, the Panel, the London Stock Exchange and the Financial Conduct Authority.

Additional information for US investors

            The Offer is being made for securities of a UK company and Vectura Shareholders in the United States should be aware that this announcement and any other documents relating to the Offer have been or will be prepared in accordance with the Takeover Code and UK disclosure requirements, format and style, all of which differ from those in the United States.  Vectura's financial statements, and all financial information that is included in this announcement, the Offer Document, or any other documents relating to the Offer, have been or will be prepared in accordance with IFRS and may not be comparable to financial statements of companies in the United States or other companies whose financial statements are prepared in accordance with US generally accepted accounting principles.

            The Offer is being made in the United States pursuant to applicable US tender offer rules and securities laws, including any applicable exemptions under the US Securities Exchange Act of 1934 (the "US Exchange Act"), and otherwise in accordance with the requirements of English law, the Takeover Code, the Panel, the London Stock Exchange and the FCA.  The Offer will be made in the United States by PMI Bidder and no one else. Accordingly, the Offer will be subject to disclosure and other procedural requirements, including with respect to withdrawal rights, settlement procedures and timing of payments that are different from those applicable under United States domestic tender offer procedures and laws.  US investors should closely read the Offer Document for further details.  In particular, US investors should note that once the Offer is declared unconditional in all respects, PMI Bidder will accept all Vectura Shares that have by that time been validly tendered in acceptance of the Offer and will, in accordance with the Takeover Code, pay for all such accepted Vectura Shares within 14 calendar days of such date, rather than the three trading days that US investors may be accustomed to in US domestic tender offers.  Similarly, if the Offer is terminated or withdrawn, all documents of title will be returned to shareholders within 14 calendar days of such termination or withdrawal.  Notwithstanding the foregoing, PMI Bidder will, to the extent practicable, pay for or return tendered Vectura Shares within seven to ten calendar days from the relevant date.

            Neither the SEC nor any US state securities commission has approved or disapproved the Offer or passed upon the adequacy or completeness of this announcement or the Offer Document.  It may be difficult for US holder of Vectura securities to enforce their rights under any claim arising out of the US federal securities laws, since Vectura is located outside of the United States, and some or all of its officers and directors may be resident outside the United States.

            In accordance with the normal UK practice, PMI Bidder or a member of the PMI Group or their respective nominees, or their brokers (acting as agents), may, from time to time, make certain purchases of, or arrangements to purchase Ventura Shares outside of the United States, other than pursuant to the Offer, until the date on which the Offer becomes effective, lapses or is otherwise withdrawn.  These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices.  Any information about such purchases will be disclosed, as required in the UK, will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. To the extent that such information is required to be publicly disclosed in the UK in accordance with applicable regulatory requirements, this information will as applicable also be publicly disclosed in the United States.

            In accordance with, and to the extent permitted by, the Takeover Code, normal UK market practice and Rule 14e-5 under the US Exchange Act, BofA Securities and their affiliates may continue to act as exempt principal traders in Vectura Shares on the London Stock Exchange and will engage in certain other purchasing activities consistent with their respective normal and usual practice and applicable law, including Rule 14e-5 under the US Exchange Act.  To the extent required to be disclosed in accordance with applicable regulatory requirements, information about any such purchases will be disclosed on a next day basis to the Panel and will be available from any Regulatory Information Service, including the Regulatory News Service on the London Stock Exchange website www.londonstockexchange.com.  To the extent that such information is required to be publicly disclosed in the UK in accordance with applicable regulatory requirements, this information will as applicable also be publicly disclosed in the United States.

Forward-Looking Statements

This announcement (including information incorporated by reference in this announcement), oral statements made regarding the Offer, and other information published by Vectura, any member of the Vectura Group, PMI Bidder or any member of the PMI Group contain statements which are, or may be deemed to be, "forward-looking statements".  Such forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and on numerous assumptions regarding the business strategies and the environment in which Vectura, any member of the Vectura Group, PMI Bidder or any member of the PMI Group shall operate in the future and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements.

The forward‑ looking statements contained in this announcement relate to Vectura, any member of the Vectura Group, PMI Bidder or any member of the PMI Group's future prospects, developments and business strategies, the expected timing and scope of the Offer and other statements other than historical facts.  In some cases, these forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "will look to", "would look to", "plans", "prepares", "anticipates", "expects", "is expected to", "is subject to", "budget", "scheduled", "forecasts", "synergy", "strategy", "goal", "cost‑saving", "projects" "intends", "may", "will", "shall" or "should" or their negatives or other variations or comparable terminology.  Forward‑looking statements may include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; (ii) business and management strategies and the expansion and growth of PMI Bidder's, any member of the PMI Group, Vectura's or any member of the Vectura Group's operations and potential synergies resulting from the Offer; and (iii) the effects of global economic conditions and governmental regulation on PMI Bidder's, any member of the PMI Group, Vectura's or any member of the Vectura Group's respective businesses.

By their nature, forward‑looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future.  These events and circumstances include changes in the global, political, economic, business, competitive, market and regulatory forces, future exchange and interest rates, changes in tax rates, future business combinations or disposals, and any epidemic, pandemic or disease outbreak.  If any one or more of these risks or uncertainties materialises or if any one or more of the assumptions prove incorrect, actual results may differ materially from those expected, estimated or projected.  Such forward-looking statements should therefore be construed in the light of such factors.

Neither Vectura, any member of the Vectura Group or any of PMI Bidder or any member of the PMI Group, nor any of their respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward‑looking statements in this announcement shall actually occur.  Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements.

Specifically, statements of estimated cost savings and synergies relate to future actions and circumstances which, by their nature, involve risks, uncertainties and contingencies.  As a result, the cost savings and synergies referred to may not be achieved, may be achieved later or sooner than estimated, or those achieved could be materially different from those estimated.  Due to the scale of the Vectura Group, there may be additional changes to the Vectura Group's operations.  As a result, and given the fact that the changes relate to the future, the resulting cost synergies may be materially greater or less than those estimated.

The forward‑looking statements speak only at the date of this announcement.  All subsequent oral or written forward‑looking statements attributable to any member of the PMI Group or Vectura Group, or any of their respective associates, directors, officers, employees or advisers, are expressly qualified in their entirety by the cautionary statement above.

Vectura, the Vectura Group, the PMI Group and PMI Bidder expressly disclaim any obligation to update such statements other than as required by law or by the rules of any competent regulatory authority, whether as a result of new information, future events or otherwise.

Disclosure requirements of the Takeover Code

Under Rule 8.3(a) of the Takeover Code, any person who is interested in 1 per cent. or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8 3(b) of the Takeover Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s), save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they shall be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Panel's website at http://www.thetakeoverpanel.org.uk/, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.  You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Electronic communications

Please be aware that addresses, electronic addresses and certain information provided by Vectura Shareholders, persons with information rights and other relevant persons for the receipt of communications from Vectura may be provided to PMI Bidder during the Offer Period as requested under Section 4 of Appendix 4 of the Takeover Code to comply with Rule 2.11(c) of the Takeover Code.

Publication on website and availability of hard copies

A copy of this announcement shall be made available, subject to certain restrictions relating to persons resident in Restricted Jurisdictions, on Vectura's website at www.Vectura.com and on PMI's website at www.PMI.com by no later than 12 noon (London time) on the business day following the date of this announcement.  For the avoidance of doubt, the contents of this website are not incorporated into and do not form part of this announcement.

You may request a hard copy of this announcement by contacting Vectura's registrar, Computershare Investor Services Plc, on 0370 707 1387 (or from outside of the UK, on +44 (0)370 707 1387) between 8:30 a.m. to 5:30 p.m. Monday to Friday (London time) (except English and Welsh public holidays) or by submitting a request in writing to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6ZY.  Please note that Computershare cannot provide any financial, legal or tax advice and calls may be recorded and monitored for security and training purposes.  You may also request that all future documents, announcements and information to be sent to you in relation to the Offer should be in hard copy form.

Rounding

Certain figures included in this announcement have been subjected to rounding adjustments.  Accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures that precede them.

General

If the Offer is effected by way of a Takeover Offer, such offer becomes or is declared unconditional in all respects and sufficient acceptances are received, PMI Bidder intends to exercise its rights to apply the provisions of Chapter 3 of Part 28 of the Companies Act so as to acquire compulsorily the remaining Vectura Shares in respect of which the Takeover Offer has not been accepted.

Investors should be aware that PMI Bidder may purchase Vectura Shares otherwise than under any Takeover Offer or the Scheme such as pursuant to privately negotiated purchases.

If you are in any doubt about the contents of this announcement or the action you should take, you are recommended to seek your own independent financial advice immediately from your stockbroker, bank manager, solicitor or independent financial adviser duly authorised under the Financial Services and Markets Act 2000 (as amended) if you are resident in the United Kingdom or, if not, from another appropriate authorised independent financial adviser.