Lonza says $5.5B deal for Capsugel gets regulatory approvals

Regulators give green light to Lonza acquisition of Capsugel.

Switzerland-based CDMO Lonza said it has been given the green light by regulators for its $5.5 billion deal to buy U.S.-based contract capsule and drug producer Capsugel from KKR.

The company said it expects to complete the purchase in the next few days, pending customary closing conditions.

The deal, which was announced late last year, puts Lonza at the forefront of contract manufacturing in what has been a hot CDMO consolidation market of late.

Earlier this month, Albany, New York-based AMRI agreed to a buyout by private equity firm The Carlyle Group and GTCR worth more than $920 million. News of that deal came weeks after CDMO giant Patheon agreed to be acquired by Thermo Fisher Scientific for $7.2 billion.

As part of its deal, Lonza will have to refinance $2 billion in Capsugel debt, yet Lonza expects the transaction to be accretive almost immediately by providing about $100 million in savings through cross-selling opportunities and by combining manufacturing and services.

While Lonza works in the arena of specialty ingredients and biologics New Jersey-based Capsugel sells both empty two-piece capsules and finished dose products. Lonza has 9,800 full-time employees and 11 contract development and manufacturing sites worldwide with Capsugel touting 3,600 employees and 13 facilities on three continents. 

Lonza has said it expects that it can gain about $30 million in annual savings in the first three years from combining corporate, procurement and IT functions of the two companies.