Lonza Completes Capsugel Acquisition

Lonza has gained all regulatory approvals for its proposed acquisition of Capsugel – the biggest buy in its history – and expects to close the transaction imminently, the company said late last week.

The two fine chemicals producers signed a definitive agreement at the end of last year.

Swiss-based Lonza is paying US private equity investor KKR $5.5 billion for all assets of the US company based at Morristown, New Jersey, which is regarded as one of the leading producers of capsules for delivery of drugs and food supplements. Additionally, it will refinance the acquired company’s existing debt of $2 billion.

With around 3,600 employees at 13 facilities on three continents, Capsugel manufactures empty two-piece hard capsules as well as finished dosage forms for oral or inhalable drugs.

Richard Ridinger, CEO of Lonza, said the acquisition, which he expects to be accretive to core earnings per share in the first full year after closing, meets the company’s strategic and financial goals, accelerating its healthcare continuum strategy by giving it broader exposure to the fast-growing pharma and consumer healthcare markets.

“This new integrated approach,” he said, “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.”

In announcing the acquisition last year, Ridinger said management expects operating synergies of 30 million Swiss francs and tax synergies of some 15 million francs by year three.

Lonza is financing the transaction in part through net proceeds from the successful placement in April of 5 million new shares priced at 173 Swiss francs with total gross proceeds of 865 million Swiss francs and the issuance of new shares with gross proceeds of 2.26 billion Swiss francs completed in May.

Benefits expected to be realized through the deal include operating synergies of 30 million Swiss francs and tax synergies of some 15 million francs by year three. The bulk of the benefits, the Lonza CEO said, is expected to come from “top-line synergies” of 100 million francs per year in the mid-to-long term.