Lonza to buy Capsugel for $5.5bn in cash

Swiss pharmaceutical manufacturer Lonza Group has agreed to buy US capsule products maker Capsugel for $5.5bn in cash from KKR.

The deal, which is expected to close in the second quarter of next year, will be financed with a combination of debt and equity financing.

Chief executive officer Richard Rindinger said: “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.

“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.”

Lonza anticipates that the deal will be accretive to its core earnings per share from the first full year after closing and said it intends to retain its current dividend policy.

It expects to achieve operating synergies of around CHF30m per year, which are expected to be realised by year three, in the areas of corporate, procurement and IT, as well as various efficiency gains. In addition, the group sees tax synergies of around CHF15m a year.

At 0955 GMT, Lonza shares were down 6.6% to CHF158.40.