Lonza to buy US capsule products manufacturer Capsugel for $5.5 bn
16 December 2016
Swiss pharmaceutical company Lonza Group AG yesterday struck a deal to buy US capsule manufacturer Capsugel from its owner, private equity firm KKR & Co, for $5.5 billion in cash.
The acquisition includes Capsugel's debt of approximately $2 billion.
The enlarged business would have had combined 2015 revenues of approximately CHF 4.8 billion ($4.74 billion) and adjusted EBITDA of approximately CHF 1.1 billion ($1 billion).
Lonza expects the acquisition through a combination of debt and equity financing. It has committed debt financing for $5.5 billion from BofA Merrill Lynch and UBS and plans to raise equity, which is fully underwritten by UBS and BofA Merrill Lynch for up to CHF 3.3 billion.
Lonza, based in Basel, said that the acquisition is designed to create a leading integrated, value-added solutions provider in drug development, formulation, delivery technologies and manufacturing for the global pharma and consumer healthcare industries.
Lonza expects to achieve operating synergies of CHF 30 million per year by year three through corporate, procurement and IT, as well as various efficiency gains and expects tax synergies of CHF 15 million per annum.
KKR, which had acquired Capsugel from US drug giant Pfizer in 2011 for $2.4 billion, had put the New Jersey-based capsule products maker on the block through an auction and had attracted health care, industrial and Asian suitors.
Founded in 1931 in Detroit, Michigan, as a division of Parke-Davis, Capsugel was sold to Warner Lambert in 1970. Capsugel became a subsidiary of Pfizer after it acquired Warner Lambert in 2000.
Capsugel manufactures and sells drug capsules as well as sells equipment for filling empty and liquid capsules, and equipment for sealing liquid capsules.
It has more than 4,000 customers in over 100 countries and 13 manufacturing sites and three research and development centers in nine countries across three continents.
Its customers include companies that make branded, generic and specialty pharmaceuticals; biotech products; over-the-counter medicines; vitamins and dietary supplements.
''The acquisition of Capsugel meets Lonza's strategic and financial goals. It accelerates our healthcare continuum strategy by giving us broader exposure to the fast-growing pharma and consumer healthcare markets,'' said, Richard Ridinger, CEO of Lonza.
Founded in 1897 in the Swiss Alps, Lonza is one of the world's leading suppliers to the pharma & biotech and specialty ingredient markets.
Its products and services range from active pharmaceutical ingredients and stem-cell therapies to drinking water sanitizers, from industrial preservatives to microbial control solutions, bacteria and other pathogens, from the manufacture of vitamin B compounds and organic personal care ingredients to agricultural services and products.
The Swiss and Singapore-listed company has a market cap of $9.43 billion and generated sales of CHF 3.8 billion in 2015.
It has more than 40 major manufacturing and R&D facilities and approximately 9,800 employees worldwide.
Lonza has recently been looking at acquisitions and had in August struck a deal to acquire InterHealth Nutraceuticals, a US-based maker of nutritional ingredients used in dietary supplements, for up to $300 million.
Media had also reported in April that Lonza was seeking to buy US drug delivery technology company Catalent Inc from private equity firm Blackstone Group. (See: Lonza Group tables bid for US drug delivery technology company Catalent)