In what may be the first of a series of sell-off announcements, Pfizer ($PFE) says it has found a buyer for its Capsugel unit. Private equity firm KKR has agreed to acquire the subsidiary--which makes hard capsules, soft gels and other drug vessels--for $2.38 billion.
Although Pfizer said last fall it was weighing a possible sale of Capsugel--before Ian Read took over as CEO--the deal seems to fit with the company's new strategy. Pfizer executives have said that it is reviewing various units, with an eye to shedding businesses that might deliver more value via sale or spin-off.
"They're looking at ways to make the company smaller," Hapoalim Securities analyst Jon LeCroy told Reuters. "The key for any company obviously is getting back to growth, and Pfizer is so big, it's almost impossible for them to do that."
The cash deal for Capsugel will give Pfizer's share-buyback program a boost, the company said. Already planning to repurchase $5 billion in shares, the company will expand that total, provided the deal closes this year. Pfizer also dialed back its revenue expectations for 2011 because of the sale, to $65.2 billion to $67.2 billion, down from $66 billion to $68 billion. Capsugel contributed $750 million to the company's top line in 2010.