• The tobacco giant here is Philip Morris (NYSE: PM), the 2nd-biggest seller of cigarettes on Earth while the drugmaker is Vectura (LON: VEC), a British company whose specialty is making asthma inhalers. After winning a bidding war with the biggest offer of £1bn ($1.4bn), Philip Morris has gotten the majority vote from Vectura’s shareholders (75% of them) to proceed with its acquisition, it announced.

• Before winning the vote from Vectura’s shareholders, Philip Morris had a bidding war with the Carlyle Group, an American private equity firm. Carlyle was the first to offer to buy Vectura before getting outbid by Philip Morris, then brought a higher offer than Philip Morris before getting outbid again by the tobacco giant. Offering the highest price, it’s not surprising that Vectura’s shareholders have accepted Philip’s offer despite the optics of it being a major vendor of a leading asthma cause.

But, even as Vectura’s shareholders have penned down their agreement, some serious opposition is brewing against the deal in both the UK and US, such as from health groups pressing that Philip Morris could use Vectura’s technologies and expertise to make its tobacco products more addictive and also meddle with Vectura’s participation in health research against tobacco products;

• It’s unclear if the opposition is enough to sway the deal.

• For the brewing opposition, competing bidder Carlyle Group has kept its lower-priced offer still on the table with hopes that Vectura’s shareholders wouldn’t approve the sale on ethical or environmental grounds, but that apparently didn’t happen. 

Philip Morris is pitching its Vectura purchase as part of its plan to diversify its product portfolio away from tobacco and nicotine and towards “inhaled therapeutics”. The company says it’s staking its future on “smoke-free products that are a better choice than cigarette smoking”, surely after selling magnitudes of cigarettes.

• Though it’s supposedly trying to diversify, cigarette products would likely remain Philip Morris’ stronghold for much in the future. It accounted for the vast majority of the company’s $76bn revenue in 2020 while Vectura brought in a relatively paltry $245mn in sales in the same year.