Adam Putz December 15, 2016
KKR has agreed to sell Capsugel, a maker of capsules and other drug delivery products, to Lonza Group (SWX: LONN) for about $5.5 billion in cash, including the restructuring of about $2 billion in debt. KKR had acquired Capsugel in 2011 from Pfizer (NYSE: PFE) for $2.4 billion. The sale represents a 15.1x EV/adjusted-EBITDA multiple based on the 12 months ended September.
The exit continues a rapid-fire December for the private equity juggernaut—it's just one of a handful of billion-dollar deals in which KKR has participated so far this month.
For Lonza, a Swiss pharmaceutical company, the acquisition complements existing offerings in the pharma, consumer healthcare and nutrition sectors. The company anticipates operating synergies of CHF30 million (about $29.1 million) and tax synergies of about half that figure over "the mid- to long-term." Combined, Lonza and Capsugel recorded revenues of about $4.7 billion and adjusted EBITDA of roughly $1.1 billion.
The acquisition of Capsugel comes after Lonza had previously eyed a takeover of fellow drugmaker Catalent but the two businesses could not agree on a price, according to Reuters.
The purchase extends a decade in which Lonza has been a consistent acquirer, undertaking at least one deal every year, according to the PitchBook Platform. For KKR, the sale maintains one of the firm's busiest years ever when it comes to divestments—it is KKR's 38th sale of the past 12 months, most since at least 2005.
This most recent exit is expected to close in 2Q 2017.
Lonza’s share price dropped 4.6% Thursday to close trading at CHF161.80. Lonza secured committed debt financing for the acquisition from BofA Merrill Lynch and UBS, with Jenner & Block providing the company with legal advice.