Type of information: Company acquisition
Acquired company: Capsugel (USA - NJ)
Acquiring company: Lonza (Switzerland)
Amount: $ 5.5 billion
- • On July 6, 2017, Lonza announced that following the receipt of all required regulatory approvals, it has completed the acquisition of Capsugel from KKR for $ 5.5 billion in cash, including refinancing of existing Capsugel debt of approximately $ 2 billion. The acquisition of Capsugel, a world leader in advanced oral dosage delivery technologies with a leading position in hard capsules, is expected to be accretive to Lonza’s core earnings per share in the first full year post closing.
- Capsugel’s business will continue to operate in its existing structure until the full integration has been completed.
- • On June 27, 2017, Lonza announced that it has received all regulatory approvals for the proposed acquisition of Capsugel by Lonza. With all final regulatory approvals in place, Lonza can now complete the transaction, which is expected to close in the next days subject to the satisfaction of customary closing conditions.
- • On December 15, 2016, Lonza, KKR and Capsugel announced that they have entered into a definitive agreement under which Lonza will acquire Capsugel from KKR for $ 5.5 billion in cash, including refinancing of existing Capsugel debt of approximately $ 2 billion, through a transaction that has been approved by the Boards of Directors of both Lonza and Capsugel. The transaction will be financed with a combination of debt and equity financing. The EV/adjusted EBITDA multiple for the transaction adds up to 15.1x based on the last 12 months adjusted EBITDA figures up to September 2016.
The enlarged business would have had combined 2015 revenues of approximately CHF 4.8 billion and adjusted EBITDA of approximately CHF 1.1 billion with an enhanced margin profile.
The primary initial focus of this transaction is to ensure a seamless integration while continuing the strong growth trajectory of the Capsugel business. Lonza believes that the step-by-step integration will preserve the strong innovation culture and lead to a combined top-line synergy potential of around CHF 100 million per annum in the mid- to long-term. Lonza expects to achieve operating synergies of CHF ~30 million per annum, which are expected to be fully realized by year three, in the areas of corporate, procurement and IT, as well as various efficiency gains. In addition, tax synergies of CHF ~15 million per annum are expected.
The $5.5 billion all-cash acquisition of Capsugel will be financed with a combination of debt and equity financing. Lonza has committed debt financing for the full acquisition amount from BofA Merrill Lynch and UBS and plans to raise equity, which is fully underwritten by UBS and BofA Merrill Lynch for an amount up to CHF 3.3 billion.
Jefferies LLC is serving as lead financial adviser to Lonza. UBS AG and BofA Merrill Lynch also provided financial advice. Jenner & Block LLP is serving as Lonza’s legal counsel. Goldman Sachs is serving as sole financial adviser to Capsugel. Simpson Thacher & Bartlett LLP is serving as Capsugel’s legal counsel.
- 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. With the addition of Capsugel’s world-leading advanced oral dosage delivery technologies, including its leading position in hard capsule technologies, Lonza will become a partner of choice for its pharma customers along the entire value chain. The combined technologies and offerings will provide customers innovative solutions in both large and small molecules and solidify Lonza’s position as the partner best able to support the pharma industry by bringing new, differentiated medicines to market rapidly and efficiently.
- In addition, the acquisition is expected to strengthen Lonza’s position in consumer healthcare and nutrition as Lonza becomes a fully integrated and innovative service provider of active ingredients, oral dosage forms, development services and delivery technologies.
- With approximately 3,600 employees and 13 facilities on three continents, Capsugel has a customer-centric, entrepreneurial and collaborative culture that closely aligns with Lonza’s corporate culture.
Related: Technology - Services - Bioproduction - Manufacturing