The boss of Legal & General has refused to be drawn into the controversy surrounding the sale of Vectura, the respiratory drug maker, to cigarettes group Philip Morris International, despite L&G being a leading shareholder in the pharmaceuticals company.
Philip Morris’s £927 million plan to buy the London-listed group faces a backlash from respiratory health organisations, including from the American Lung Association and American Thoracic Society, which have raised concerns the cigarettes group could use Vectura’s inhalation services technologies to make its tobacco products more addictive.
Shareholders in Vectura have the power to block the deal. Their vote on the takeover is considered by some to be a test of fund management firms’ credentials as responsible investors.
L&G’s £1.3 trillion asset management arm is a leading proponent of environmental, social and governance investing. It started a tobacco-free pension fund for client Cancer Research UK four years ago.
Its investment division owns a 3.7 per cent Vectura stake in its index-tracking funds, making it a top 10 investor. However, Nigel Wilson, L&G’s chief executive, would not say yesterday what he thought of the deal. He said decisions about investments were taken independently by L&G’s asset management arm, which so far has not commented on Vectura.
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“They make hundreds and hundreds of decisions and we don’t get involved,” Wilson said, adding of the Vectura situation: “Other than reading about it in the paper, it’s not something I’m called upon to opine on in my daily job.”
He said he did not know which way the asset management arm would vote on the takeover and he would not share his personal view on the matter with a newspaper.
Carlyle, the private equity firm, had been set to buy Vectura until Philip Morris gatecrashed its deal. The buyout group yesterday fuelled expectations it might make an improved offer for the drugs company by reaching an agreement with Vectura to push back the date on which Vectura’s shareholders can approve its existing offer to August 24.
