A takeover in Britain shows shareholders still rule the corporate roost

On September 20th Philip Morris International , a giant cigarette-maker, announced it had convinced over three-quarters of the shareholders in Vectura, a British pharmaceutical business, to back its takeover plan. Thus a maker of inhalers designed to combat respiratory diseases will soon be fully owned by a firm whose products often cause them.

If stakeholderism had any teeth, this would have been the moment to bare them. Vectura is certainly among those beyond-mere-shareholder companies. It was spun out of academia in 1997. Its annual report talks of building a business that delivers value to stakeholders, among them employees, suppliers and patients. Staying independent was probably a stretch given Vectura’s ho-hum performance in recent years.

. They did not pretend stakeholders beyond the shareholder register were in a position to block the deal, not even staff . Instead, their main argument was to point out that a-owned Vectura’s long-term profitability would suffer if its scientists were left unable to participate in industry conferences, or if doctors balked at prescribing medicinal products tarred with big tobacco’s brush.

Ultimately, nobody disagreed that the outcome was for owners of the stock to decide. Even that might have derailed the creation of a pharma-tobacco group, given the presence on Vectura’s share register of many fund managers whose bosses trumpet their stakeholderist tendencies. Plenty make money peddling funds that specifically exclude tobacco, and rarely lose an opportunity to paint themselves as visionaries looking beyond just profits.

Quite often, stakeholder satisfaction will align with shareholder success. A happy workforce, satisfied customers and so on tend to lead to good financial outcomes. In this case,will get from Vectura something that matters more than its target’s earnings. The purveyor of cigarettes has pushed hard into smoke-free products. This started with vaping, but is now extending to things that have nothing to do with nicotine.

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