BASEL, Switzerland and
MORRISTOWN, N.J., Dec. 15, 2016 /PRNewswire/ --
Strategic Advantages
- Lonza to acquire Capsugel for USD 5.5
billion, including refinancing of existing Capsugel debt of
USD ~2 billion
- Acquisition is expected to accelerate Lonza's growth and
ability to deliver value along the healthcare continuum
- Acquisition addresses needs of customers for integrated,
value-added solutions that accelerate drug and ingredient delivery
to patients and consumers
- The combined portfolio offering will position Lonza as the
development, formulation, delivery technology and manufacturing
partner of choice for the pharma industry
- Lonza will become a fully integrated solutions provider in oral
delivery technologies and active ingredients to the consumer
healthcare and nutrition markets
Financial Advantages
- Lonza expects to achieve CHF ~30 million p.a. operating
synergies and CHF ~15 million tax synergies p.a. by year
three and CHF ~100 million p.a. top-line synergies in the mid- to
long-term
- Transaction is expected to be CORE EPS accretive in the first
full year post closing
- Capsugel's profitable business model and robust cash generation
expected to further enhance Lonza's strong financial profile
- Lonza intends to retain current dividend policy and maintain
~3x net debt/EBITDA leverage
Lonza Group AG ("Lonza," VTX: LONN.VX), KKR and Capsugel S.A.
("Capsugel") today announced that they have entered into a
definitive agreement under which Lonza will acquire Capsugel from
KKR for USD 5.5 billion in cash,
including refinancing of existing Capsugel debt of approximately
USD 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.
This 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.
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. 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 active pharmaceutical ingredients (APIs) through
excipients to dosage forms and delivery technologies.
With 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.
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. 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 products.
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. 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.
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. Both companies focus on quality, operational excellence
and delivering on promises.
Richard Ridinger, Chief
Executive Officer of Lonza, commented, "The 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."
He explained further, "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."
Guido Driesen, President and
Chief Executive Officer of Capsugel, said, "This 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."
He added, "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."
Pete Stavros, Member of KKR
and Head of the Industrials Investing Team, said, "Since
acquiring Capsugel five 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."
Synergies
The 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 dosage forms.
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.
Lonza anticipates that the transaction will be accretive to its
CORE Earnings per Share (EPS) from the first full year post closing
onwards and intends to retain its current dividend policy.
Financing and Approvals
The USD 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.
Lonza's 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.
Lonza 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.
The 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.
Additional 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.
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.
About Lonza
Lonza 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.
Not 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 pathogens.
Founded 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.
Further information can be found at www.lonza.com.
Lonza Contact Information
Lonza Group
Ltd
|
Lonza Group
Ltd
|
Lonza Group
Ltd
|
Head Investor
Relations
|
Head Corporate
Communications
|
Head External
Communications
|
Dirk
Oehlers
|
Dominik
Werner
|
Constance
Ward
|
Tel +41 61 316
8540
|
Tel +41 61 316
8798
|
Tel +41 61 316
8840
|
Fax +41 61 316
9540
|
Fax +41 61 316
9540
|
Fax +41 61 316
9840
|
dirk.oehlers@lonza.com
|
dominik.werner@lonza.com
|
constance.ward@lonza.com
|
About Capsugel
Capsugel 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.
We 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.
Capsugel Contact Information
Capsugel
|
Brunswick
Group
|
Head Corporate
Communications
|
Steve
Lipin
|
Frank
Briamonte
|
Tom
Maginnis
|
Tel +1 862 242
1652
|
Tel +1 (212) 333
3810
|
frank.briamonte@capsugel.com
|
capsugel@brunswickgroup.com
|
About KKR
KKR 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.
KKR Contact Information
KKR
Kristi Huller
Tel +1 212 230 9722
media@kkr.com
Additional Information and Disclaimer
Lonza Group Ltd has its headquarters in Basel, Switzerland, and is listed on the SIX
Swiss Exchange. It has a secondary listing on the Singapore
Exchange Securities Trading Limited ("SGX-ST"). Lonza Group Ltd is
not subject to the SGX-ST's continuing listing requirements but
remains subject to Rules 217 and 751 of the SGX-ST Listing
Manual.
This announcement may include statements that are, or may be
deemed to be, "forward-looking statements". These forward-looking
statements may be identified by the use of forward-looking
terminology, including the terms "believes", "estimates", "plans",
"projects", "anticipates", "expects", "intends", "may", "will" or
"should" or, in each case, their negative or other variations or
comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. Forward-looking
statements may and often do differ materially from actual results.
Any forward-looking statements reflect Lonza Group Ltd's current
view with respect to future events and are subject to risks
relating to future events and other risks, uncertainties and
assumptions relating to Lonza Group Ltd's business, results of
operations, financial position, liquidity, prospects, growth or
strategies. Forward-looking statements speak only as of the date
they are made.
Each of Lonza Group Ltd, Merrill Lynch International, UBS, and
their respective affiliates expressly disclaims any obligation or
undertaking to update, review or revise any forward-looking
statement contained in this announcement, whether as a result of
new information, future developments or otherwise.
Disclaimer
This announcement is not an advertisement and not a prospectus
and not an offer of, or a solicitation of an offer to buy,
securities to U.S. persons or in any jurisdiction, including in or
into the United States,
Canada, Japan or Australia, where such offer or solicitation is
unlawful. This announcement is not an offer to sell, or a
solicitation of an offer to purchase, any securities of Lonza Group
Ltd, nor shall it or any part of it form the basis of, or be relied
on in connection with, any contract or investment decision.
The contents of this presentation have been prepared by and are
the sole responsibility of Lonza Group Ltd and Capsugel. None of
Merrill Lynch International, UBS, or any of their respective
directors, officers, employees, advisers or agents accepts any
responsibility or liability whatsoever for or makes any
representation or warranty, express or implied, as to the truth,
accuracy or completeness of the information in this announcement
(or whether any information has been omitted from the announcement)
or any other information relating to the Lonza Group Ltd, Capsugel
and/or their subsidiaries or associated companies, whether written,
oral or in a visual or electronic form, and howsoever transmitted
or made available, or for any loss, whether arising from any use of
this announcement or its contents or otherwise arising in
connection therewith.
The information contained in this presentation is for background
purposes only and does not purport to be full or complete. No
reliance may be placed by any person for any purpose on the
information contained in this presentation or its accuracy,
fairness or completeness.
The distribution of this announcement may be restricted by law
in certain jurisdictions, and persons into whose possession any
document or other information referred to herein comes should
inform themselves about and observe any such restriction. Any
failure to comply with these restrictions may constitute a
violation of the securities laws of any such jurisdiction.
The securities to which this announcement relates have not been
and will not be registered under the United States Securities Act
of 1933, as amended (the "Securities Act"), and may not be
offered or sold in the United
States absent registration or an exemption from registration
under the Securities Act. There will not be a public offering of
securities in the United
States.
This announcement is not an offering circular within the meaning
of article 652a of the Swiss Code of Obligations, nor is it a
listing prospectus within the meaning of the listing rules of the
SIX Swiss Exchange or a prospectus under any other applicable
laws.
This communication does not constitute an "offer of securities
to the public" within the meaning of Directive 2003/71/EC of the
European Union (the "Prospectus Directive") of the
securities referred to herein in any member state of the European
Economic Area (the "EEA"). Any offers of the securities
referred to in this announcement to persons in the EEA will be made
pursuant to an exemption under the Prospectus Directive, as
implemented in member states of the EEA, from the requirement to
produce a prospectus for offers of the Securities. In the
United Kingdom, this announcement
is directed exclusively at Qualified Investors (i) who have
professional experience in matters relating to investments falling
within Article 19(5) of the Financial Services and Markets Act 2000
(Financial Promotion) Order 2005, as amended (the "Order") or (ii)
who fall within Article 49(2)(A) to (D) of the Order, and (iii) to
whom it may otherwise lawfully be communicated, and any investment
activity to which it relates will only be engaged in with such
persons, and it should not be relied on by anyone other than such
persons.
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SOURCE Capsugel