Philip Morris's unlikely attempt to buy an asthma medicine company has forced a rare auction process.
The tobacco giant has been locked in a £1bn bidding war with US private equity firm Carlyle over drugmaker Vectura.
Now the regulator, the Takeover Panel, has given them a week to make their best offers for the FTSE 250 firm.
Vectura makes inhaled medicines and devices to treat respiratory illnesses such as asthma. It counts Novartis and GSK among its customers.
On Monday, the Marlboro cigarette-maker increased its offer to £1.65 ($2.29) per share after Carlyle offered £958m ($1.3bn) on Friday.
The takeover battle began in May with a £958m bid from Carlyle, which received early backing from Vectura's board.
Directors changed their minds when Philip Morris entered the fray, but then switched sides again when Carlyle upped its offer.
The Takeover Panel said all three firms had agreed to the terms of the auction procedure.
Philip Morris recently said it could stop selling cigarettes in the UK in 10 years' time as it focuses on alternatives, such as heated tobacco.
The firm indicated it would welcome a government ban on cigarettes and said "strong regulation" was needed to "help solve the problem of cigarette smoking once and for all".
However, health charity Ash said it was hard to take such claims seriously from the firm responsible for selling over a tenth of cigarettes globally.
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