Lonza To Acquire Capsugel for $5.5 BillionBy
Lonza Group has agreed to acquire Capsugel from the private-equity firm KKR for $5.5 billion in cash, including refinancing of existing Capsugel debt of approximately $2 billion.
With the proposed acquisition of Capsugel, Lonza is making good on its previously announced intent to build drug-product development and manufacturing capabilities to complement the company’s core capabilities in small-molecule and biologic-based active pharmaceutical ingredient development and manufacturing.
In November 2016, Lonza opened pharmaceutical drug-product services laboratories in Basel, Switzerland. Scientists in a new 1,300-square-meter facility will focus initially on formulation development, drug product analytical development, and quality control. Lonza first announced plans to expand its pharmaceutical and biotechnology segment by offering development and manufacturing services for clinical outsourcing of drug products in February 2016. At the time of the February announcement, Lonza said that these drug-product services will focus on parenteral dosage forms, including products for injection and infusion for intravenous, subcutaneous, intraocular and other routes of parenteral administration. Services will include options for monoclonal antibodies, other biologics, drug conjugates, peptides and small molecules that require a parenteral dosage form.
With the acquisition of Capsugel, Lonza positions itself in oral dosage delivery technologies, including a position in hard-capsule technologies. Following the $2.38 billion of Capsugel by KKR in 2011, Capsugel has made several key acquisitions to build its technology base. Early this year, the company acquired Xcelience, a Tampa, Florida-headquartered contract development and manufacturing organization (CDMO) specializing in clinical trial material supply and small-scale commercial manufacturing, and Powdersize, a Quakertown, Pennsylvania specialist in micronization. In 2013, Capsugel acquired Bend Research, a Bend, Oregon-based CDMO to build capabilities in spray drying and other approaches for addressing bioavailability issues of poorly water-soluble drugs. Capsugel subsequently announced a $20 million expansion to enhance commercial manufacturing capabilities for spray-dried dispersions, and in 2015, Capsugel announced plans for a $25-million investment to expand production for vegetable-based capsules.
The boards of directors of Capsugel and Lonza have both approved the transaction, which is expected to close in the second quarter of 2017, subject to certain regulatory approvals and other customary closing conditions. Lonza expects to achieve top-line synergy potential of around CHF 100 million ($97 million) per annum in the mid- to long-term.