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Dec 15, 2016

Reuters | Deals: Lonza to Buy U.S. Drug Capsules Maker Capsugel From KKK For $5.5 Billin
By Brenna Hughes Neghaiwi and Ludwig Burger
Lonza Group AG announced its biggest ever acquisition on Thursday with a deal to buy Capsugel, a U.S. maker of capsule products and other drug delivery systems, for $5.5 billion in cash to broaden its product range as a pharmaceuticals industry supplier.

The Swiss company's shares fell by over 7 percent on the news to around 157 Swiss francs ($154) on concerns that the acquisition, costing over 60 percent of Lonza's market value, and a planned capital increase of up to 3.3 billion Swiss francs ($3.22 billion), would be hard to digest.
The share price had already fallen by 5.3 percent on Monday after Reuters reported Lonza was in advanced talks to buy Capsugel from private equity firm KKR.
"We like the logic of the deal but think it is not a bargain," analysts at Baader Helvea said. "The pending capital raising will weigh on Lonza's stock."
Lonza has long been seeking to bulk up with an acquisition and earlier this year was looking at U.S. group Catalent to give it a wider range of active pharmaceutical ingredients and drug delivery products but failed to agree on price, sources have said.
Based in Morristown, New Jersey, Capsugel manufactures empty two-piece hard capsules as well as finished dosage forms for oral or inhalable drugs to make sure that active ingredients are absorbed by the body in the right place.
Lonza Chief Executive Richard Ridinger said Capsugel's drug delivery products - which ensure, for example, that a drug reaches

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