Capsugel Sold to Lonza in $5.5bn Deal
15 Dec 2016 --- Capsugel, the US provider of capsules for the food and healthcare industries, has been sold to Swiss pharmaceutical company Lonza Group AG for $5.5bn. Lonza has bought Capsugel from private equity firm KKR, after it won out in an auction against a number of undisclosed rivals. In recent years, Capsugel has transformed its business model to become a speciality CDMO that designs, develops and manufactures a wide range of innovative dosage forms for the biopharmaceutical and consumer health and nutrition industries.
Lonza chief executive Richard Ridinger said: “The combined business will allow us to partner with our customers to help them bring highly differentiated products to market more quickly and efficiently.”
Lonza, which makes a range healthcare and chemical products, said it would raise 3.3bn Swiss francs ($3.2bn) in debt and equity to finance the deal. It said the deal would raise earnings in the first full year following its expected completion in the second quarter of 2017.
The Swiss company said it expects synergies from the deal to amount to 30m Swiss francs ($29m) a year after three years following the deal’s completion, as well as 15m Swiss francs ($14.6m) a year in tax synergies.
The deal has been approved by both companies’ boards.
Currently, approximately two-thirds of Capsugel’s global business comes from biopharma and about one-third from consumer health and nutrition. Its range of capsules used in the food industry include specialized gelatin and vegetarian capsules, including non-GMO certified capsules.
The deal will strengthen Lonza’s position in consumer healthcare and nutrition, with Lonza saying today it would now be “well positioned to meet the increasing need for optimized consumer health and nutrition through a wide offering of next-generation dosage forms”.
Lonza added: “The combined business will also be able to leverage its bioavailability technology to create a new dietary ingredient-ready offering, as well as capitalize on its formulation expertise to develop new ingredients and to market new combination products.”
The deal has gone through just days after Lonza, which has been on the hunt for acquisitions, confirmed it was in late stage talks to buy Capsugel following press reports.
It is unclear of the long-term fate of Capsugel’s 3,600 employees who will be marrying up with Lonza’s 9,800 employees.
Ridinger added: “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. We expect the transaction to be accretive to our core earnings per share in the first full year post closing.”
“This new integrated approach will benefit our customers, who will gain from the simplicity and efficiency of working with one company that can provide world-leading support from APIs to excipients and dosage forms. The combined business will allow us to partner with our customers to help them bring highly differentiated products to market more quickly and efficiently.”
Guido Driesen, president and CEO of Capsugel, said: “This transaction brings together two leading companies that share a common vision – to deliver real value to customers by accelerating their ability to develop and commercialize innovative pharmaceutical and healthcare products.”
“The combination of our complementary technology platforms will put us in a strong position to benefit from evolving trends in the pharma and consumer healthcare markets.”
He added: “Both companies enjoy a strong quality and regulatory track record, and we believe that the combination enables us to provide the most complete set of tailored and integrated solutions for our customers.
“We look forward to bringing together our talented teams to deliver science- and engineering-based solutions to customers for the benefit of the patients and consumers who use their products. I am personally committed to making this integration a success.”
KKR bought Capsugel from Pfizer in 2011 for $2.4bn.
