Catalent to Acquire Cook Pharmica for $950 Million

Catalent, Inc. (NYSE: CTLT), the leading global provider of advanced delivery technologies and development solutions for drugs, biologics, and consumer health products, recently announced it has reached an agreement to acquire Bloomington, Indiana-based Cook Pharmica LLC, an integrated provider of drug substance and drug product manufacturing and related services. The purchase price is $950 million, with $750 million to be paid at closing and the balance to be paid in equal installments, without interest, on each of the next four anniversaries of the closing. The acquisition will strengthen Catalent’s position as a leader in the rapidly growing area of biologics development and analytical services, manufacturing, and finished product supply.

Cook Pharmica is a privately held, biologics-focused contract development and manufacturing organization with capabilities across biologics development, clinical and commercial cell culture manufacturing, formulation, finished-dose manufacturing, and packaging. Founded in 2004 as a division of the Cook Group, Cook Pharmica today operates a world-class, 875,000 square foot development and manufacturing facility in Bloomington. For the twelve months ended June 30, 2017, Cook Pharmica generated $179 million in revenue.

“The complementary biologics development, biomanufacturing, and fill-finish capabilities of Catalent and Cook Pharmica will provide biopharmaceutical firms with a single, integrated partner supporting a wide range of clinical and commercial needs,” said John Chiminski, Chair and CEO of Catalent. “We are very excited to join forces with the talented Cook Pharmica team in Bloomington, Indiana and plan to invest aggressively there, in our rapidly expanding Madison, Wisconsin facility, and in the rest of the Catalent Biologics network to build a true global leader in the biologics market, which will help us to improve the lives of patients around the world.”

Mr. Chiminski added, “This acquisition is also a recognition of the hard work, dedication, and community spirit of the team who have helped Cook Pharmica grow, and of the Bloomington area, which is such a terrific home for this fast-growing business. We look forward to strengthening Cook Pharmica’s partnership with the community in the years to come as we further strengthen our leadership position in biologics.”

Catalent Biologics currently offers a global site network, including a state-of-the-art biologics development and biomanufacturing facility in Madison; fill-finish services in Brussels, Belgium and Limoges, France; SMARTag® conjugation technology in Emeryville, California; and a network of biologics analytical locations. Cook Pharmica’s Bloomington facility has extensive biomanufacturing capacity and deep expertise in sterile formulation and fill/finish across liquid and lyophilized vials, prefilled syringes, and cartridges. It perfectly augments Catalent’s expertise in cell line engineering, bioconjugate development, analytical services, biomanufacturing, prefilled syringe, and blow/fill/seal technologies.

Upon completion, Cook Pharmica’s over 750 associates, including its experienced executive team, will join Catalent’s network of more than 30 sites across five continents with more than 10,000 team members and complement Catalent’s existing biologics capabilities, alongside its other leading capabilities in oral, inhalation, and consumer health.

The completion of the transaction is subject to customary closing conditions, including approval from regulatory authorities, and is expected to occur in the fourth quarter of this calendar year.

Transaction Details

The acquisition is an-all cash transaction, which Catalent expects to finance with new unsecured notes and equity. Upon completion of the transaction, Catalent’s net leverage ratio, pro forma for the transaction, is expected to be approximately 5.0x. The acquisition is expected to be accretive to Catalent’s Adjusted Net Income per share in the first full fiscal year following the completion of the transaction.

Catalent has obtained committed financing, subject to customary conditions, for the transaction from Morgan Stanley Senior Funding, Inc., J.P. Morgan, RBC Capital Markets, and BofA Merrill Lynch. The purchase agreement to acquire Cook Pharmica is not subject to any financing condition. Catalent intends to file a Current Report on Form 8-K with the Securities and Exchange Commission, which will have further details concerning the transaction.

Morgan Stanley Senior Funding, Inc. is acting as lead arranger for the financing of the acquisition. J.P. Morgan Securities LLC is providing a fairness opinion to Catalent. Fried, Frank, Harris, Shriver & Jacobson LLP is acting as legal counsel to Catalent.

Conference Call & Webcast

Catalent will host a conference call and webcast at 8:30 a.m. EDT on Sept. 19, 2017 to provide more information on this announcement. The webcast and accompanying slides can be accessed at www.catalent.com/investors. An audio recording of the call will be available in that section of the website for 90 days following the call.

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About Catalent

Catalent Inc. (NYSE: CTLT) is the leading global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products. With over 80 years serving the industry, Catalent has proven expertise in bringing more customer products to market faster, enhancing product performance and ensuring reliable clinical and commercial product supply. Catalent employs approximately 10,000 people, including over 1,400 scientists, at more than 30 facilities across five continents, and in fiscal 2017 generated over $2 billion in annual revenue. Catalent is headquartered in Somerset, New Jersey. For more information, visit www.catalent.com.