Group AG, KKR, and Capsugel S.A. recently announced 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 past 12 months adjusted EBITDA
figures up to September 2016.
acquisition is fully in line with Lonza's stated strategy to accelerate growth
and deliver value along the healthcare continuum by complementing its existing
offerings and by opening up new market opportunities in the pharma and consumer
healthcare and nutrition industries. With the acquisition of Capsugel, Lonza
will add a trusted brand with a large breadth of technologies and will expand
the market reach of its contract development and manufacturing organization
(CDMO) and products businesses. It will also support Lonza's strategic ambition
of getting closer to the patient and end consumer.
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. The
combined business will be well positioned to benefit from the dynamics in these
industries and to anticipate and address technology trends in order to support
the evolving needs of its customers. It will provide additional value by
offering an integrated portfolio of industry-leading technologies, from APIs
through excipients to dosage forms and delivery technologies.
the addition of Capsugel's world-leading advanced oral dosage delivery
technologies, including its leading position in hard capsule technologies,
Lonza will become the 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.
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. As a result, Lonza will be
well positioned to meet the increasing need for optimized consumer health and
nutrition through a wide offering of next-generation dosage forms. 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
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. Lonza and Capsugel's highly synergistic customer base
and complementary business models will facilitate seamless integration. The
combined business will be able to leverage the strong regulatory track record
and global footprint of each company.
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. Both companies focus on quality,
operational excellence, and delivering on promises.
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," said Richard
Ridinger, Chief Executive Officer of Lonza.
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. 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,"
added Guido Driesen, President and
Chief Executive Officer of Capsugel.
acquiring Capsugel 5 years ago, we have supported Guido and his management team
in repositioning the company from a global leader in hard capsules into a
specialty CDMO. Capsugel has grown significantly by investing in innovation,
strategic acquisitions, product development, and geographic expansion. Now
Capsugel is well positioned for the next phase of its growth, and we look
forward to its continued success as a part of Lonza," said Pete Stavros, Member of KKR and Head of the
Industrials Investing Team.
bulk of the benefits resulting from the transaction will be gained from
positive top-line and innovation synergies. The highly synergistic customer
base, the expanded addressable market, and the improved value proposition for
the customer will allow Lonza to further leverage its current product and service
offerings. Also, the acquisition of Capsugel will allow cross-selling of
existing products, combine manufacturing solutions and services, and create an
integrated value offering that merges Lonza's ingredients with Capsugel's
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.
expects to achieve operating synergies of CHF ~30 million per annum, which are
expected to be fully realized by year 3, 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. Lonza anticipates that the transaction will
be accretive to its CORE Earnings per Share (EPS) from the first full-year post
closing onward and intends to retain its current dividend policy.
$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.
Board of Directors is currently authorized to increase the share capital
through the issuance of 5,000,000 fully paid-in registered shares. Lonza's
Board intends to seek approval for additional share capital at its upcoming
annual general meeting (AGM) in April 2017.
expects to retain a leverage profile around ~3x net debt/EBITDA at closing and
to maintain its unofficial investment-grade credit profile assigned by a number
of Swiss banks. Lonza believes that the strong projected cash flow of the
combined company will enable rapid de-leveraging after the acquisition and
continue to support all planned growth initiatives.
financial package foresees the refinancing of Lonza's current CHF 700 million
revolving credit facility.The transaction is expected to close in the second
quarter of 2017 and is subject to certain regulatory approvals and other
customary closing conditions.
information about Lonza can be found on www.lonza.com, about Capsugel on www.capsugel.com, and about
the acquisition on the dedicated transaction website www.TheFutureLonza.com,
which may be updated from time to time.
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
is one of the world's leading and most-trusted suppliers to the pharmaceutical,
biotech and specialty ingredients markets. We harness science and technology to
create products that support safer and healthier living and that enhance the
overall quality of life.
only are we a custom manufacturer and developer, Lonza also offers services and
products ranging from active pharmaceutical ingredients and stem-cell therapies
to drinking water sanitizers, from the vitamin B3 compounds and personal care
ingredients to agricultural products, and from industrial preservatives to
microbial control solutions that combat dangerous viruses, bacteria and other
in 1897 in the Swiss Alps, Lonza today is a well-respected global company with
more than 40 major manufacturing and R&D facilities and approximately 9,800
full-time employees worldwide. The company generated sales of CHF 3.8 billion
in 2015 and is organized into two market-focused segments: Pharma&Biotech
and Specialty Ingredients.
information can be found at www.lonza.com.
Lonza Group Ltd
Tel +41 61 316 8540
Fax +41 61 316 9540
Lonza Group Ltd
Tel +41 61 316 8798
Fax +41 61 316 9540
|Lonza Group Ltd
Tel +41 61 316 8840
Fax +41 61 316 9840
designs, develops and manufactures a wide range of innovative dosage forms for
the biopharmaceutical and consumer health and nutrition industries. Our unique
combination of science, engineering, formulation and capsule expertise enables
our customers to optimize the bioavailability, targeted delivery and overall
performance of their products.
partner with more than 4,000 customers in over 100 countries to create novel,
high-quality and customized solutions that align with our customers' evolving
needs and benefit patients and consumers. For more information, visit www.capsugel.com and follow
us on Twitter, LinkedIn and YouTube.
is a leading global investment firm that manages investments across multiple
asset classes including private equity, energy, infrastructure, real estate,
credit and hedge funds. KKR aims to generate attractive investment returns by
following a patient and disciplined investment approach, employing world-class
people, and driving growth and value creation at the asset level. KKR invests
its own capital alongside its partners' capital and brings opportunities to
others through its capital markets business. References to KKR's investments
may include the activities of its sponsored funds. For additional information
about KKR & Co. L.P. (NYSE: KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.
Tel +1 212 230 9722