STAMFORD, CT - Philip Morris International Inc. (NYSE: NYSE:PM) has announced the sale of its subsidiary Vectura Group Ltd. to Molex Asia Holdings Ltd., a move that includes the transfer of Vectura's operations to Phillips Medisize, a Molex company. The sale agreement includes an upfront cash payment of GBP 150 million and the potential for deferred payments up to GBP 148 million, contingent on customary purchase price adjustments.
This transaction, which is subject to standard closing conditions and regulatory approvals, is a strategic shift for Vectura, a company specializing in the development of inhaled therapeutics. Vectura was acquired by Philip Morris International in 2021, a step that significantly advanced its foray into the healthcare sector, particularly in the development of inhaled therapies. However, the association with a tobacco giant has reportedly affected Vectura’s commercial and scientific interactions within the industry.
Jacek Olczak, CEO of Philip Morris International, stated that the sale will enable Vectura to operate independently of the constraints and criticisms linked to PMI's ownership. He emphasized that Phillips Medisize's expertise in pharmaceutical drug delivery devices makes it well-suited to advance Vectura's future endeavors.
Vectura Fertin Pharma will continue to operate separately under PMI's ownership and is set to undergo a rebranding. The focus will remain on developing oral health and wellness products, as well as inhaled prescription products, with particular attention to pain management and cardiovascular emergencies.
Phillips Medisize is recognized for its global footprint in the design and manufacturing of medical devices and drug delivery systems. The company's acquisition of Vectura is expected to complement its mission to improve health outcomes through innovative products.
Philip Morris International continues to diversify its portfolio, aiming to transition beyond tobacco and nicotine products. It has invested over $12.5 billion since 2008 in developing smoke-free alternatives, with a view to eventually ceasing cigarette sales.
The information in this article is based on a press release statement.
In other recent news, Philip Morris International has announced a significant increase in its quarterly dividend to $1.35 per share, marking a 3.8% rise. The company has also reaffirmed its adjusted diluted earnings per share forecast for 2024, projecting a range of $6.33 to $6.45, reflecting a 5.3% to 7.3% increase from the previous year. This comes after major investments, including a $232 million expansion of its Owensboro, Kentucky manufacturing facility to increase production capacity for ZYN nicotine pouches.
Analysts have responded positively to these developments. BofA Securities, Stifel, and Goldman Sachs have all upgraded their financial outlook for the company, with BofA raising the stock target to $139 from $125, and Stifel increasing the price target to $138 from $120. Goldman Sachs added Philip Morris to its US Conviction List.
In line with its commitment to a smoke-free future, Philip Morris has made significant strides in the development of smoke-free products, which accounted for approximately 38% of its net revenues in the first half of 2024. The company's recent acquisition of Swedish Match further underscores this commitment. These are the recent developments for Philip Morris International.
InvestingPro Insights
Philip Morris International Inc. (NYSE: PM) has shown a strong commitment to diversifying its business portfolio, as evident in its recent sale of Vectura Group Ltd. The company's strategic moves are reflected in its financial health and market performance. According to real-time data from InvestingPro, Philip Morris has a market capitalization of $195.86 billion, underscoring its significant presence in the market. The company's P/E ratio stands at 22.29, indicating a premium valuation that investors are willing to pay for its earnings.
InvestingPro Tips highlight that Philip Morris has raised its dividend for 16 consecutive years, showcasing a reliable return to shareholders. This is further supported by a robust gross profit margin of 63.87% over the last twelve months as of Q2 2024, which points to the company's efficiency in managing its cost of goods sold and maintaining profitability. Additionally, the firm has maintained dividend payments for 17 consecutive years, reinforcing its commitment to shareholder returns. For those interested in a deeper dive, there are over 10 additional InvestingPro Tips available for Philip Morris at https://www.investing.com/pro/PM.
The company's revenue growth over the last twelve months as of Q2 2024 has been 9.89%, a healthy sign of its expanding operations. This growth is significant as Philip Morris continues to shift its focus towards a future beyond tobacco and nicotine products. The strategic sale of Vectura and continued investment in smoke-free alternatives are actions that could potentially be reflected in future revenue growth metrics.
InvestingPro data also shows a strong return over the last three months, with a price total return of 24.7%. This performance could be indicative of market confidence in the company's strategic direction and operational execution. With the next earnings date scheduled for October 22, 2024, investors and analysts will be watching closely to see how these strategic decisions continue to influence the company's financial outcomes.
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