Swiss pharmaceutical supplier Lonza Group AG has agreed to acquire New Jersey-based Capsugel from KKR for $5.5 billion in a move to expand its portfolio of drug delivery systems.
Capsugel makes empty two-piece hard capsules as well as finished dosage forms for oral or inhalable drugs. Its designs are used in vitamins, over-the-counter drugs, dietary supplements and prescription medicines.
According to Lonza, the deal, which includes the refinancing of about $2 billion of Capsugel’s existing debt, will enable it to offer “an integrated portfolio of industry-leading technologies” and “become become the partner of choice for its pharma customers along the entire value chain.”
“The acquisition of Capsugel meets Lonza’s strategic and financial goals,” Lonza CEO Richard Ridinger said in a news release. “It accelerates our healthcare continuum strategy by giving us broader exposure to the fast-growing pharma and consumer healthcare markets.”
As Reuters reports, “Lonza has long been seeking to bulk up with an acquisition,” making overtures earlier this year to U.S. company Catalent. But it shares fell nearly 5% on Thursday amid concerns about the price of the Capsugel deal, which represents more than 60% of its market value.
“We like the logic of the deal but think it is not a bargain,” analysts at Baader Helvea said.
KKR bought Capsugel from Pfizer for $2.4 billion in 2011. Reuters, citing people familiar with the matter, said the private-equity giant now stands to receive $4.1 billion from the sale of Capsugel, including dividends and paying off the company’s debt.
Capsugel has more than 4,000 corporate customers and employs about 3,600 people in 13 facilities on three continents. Ridinger said its drug delivery products complemented Lonza’s experience in pharmaceutical ingredients and contract manufacturing of active compounds.
Lonza’s industry customers could now order “either the whole menu or a la carte,” he told analysts in a conference call. “There’s nobody on this planet who can offer that.”
The Wall Street Journal noted that while health care deal-making “has dropped from 2015’s brisk pace, several companies that provide ancillary products and services to the pharmaceutical sector have announced combinations lately.”