Positions Catalent Biologics as a Leading
Partner from Development to Commercialization
Catalent, Inc. (NYSE:CTLT), the leading global provider of
advanced delivery technologies and development solutions for drugs,
biologics, and consumer health products, today announced it has
reached an agreement to acquire Bloomington, Indiana-based Cook
Pharmica LLC, an integrated provider of drug substance and drug
product manufacturing and related services. The purchase price is
$950 million, with $750 million to be paid at closing and the
balance to be paid in equal installments, without interest, on each
of the next four anniversaries of the closing. The acquisition will
strengthen Catalent’s position as a leader in the rapidly growing
area of biologics development and analytical services,
manufacturing, and finished product supply.
Cook Pharmica is a privately held, biologics-focused contract
development and manufacturing organization with capabilities across
biologics development, clinical and commercial cell culture
manufacturing, formulation, finished-dose manufacturing, and
packaging. Founded in 2004 as a division of the Cook Group, Cook
Pharmica today operates a world-class, 875,000 square foot
development and manufacturing facility in Bloomington. For the
twelve months ended June 30, 2017, Cook Pharmica generated $179
million in revenue.
“The complementary biologics development, biomanufacturing, and
fill-finish capabilities of Catalent and Cook Pharmica will provide
biopharmaceutical firms with a single, integrated partner
supporting a wide range of clinical and commercial needs,” said
John Chiminski, Chair and CEO of Catalent. “We are very excited to
join forces with the talented Cook Pharmica team in Bloomington,
Indiana and plan to invest aggressively there, in our rapidly
expanding Madison, Wisconsin facility, and in the rest of the
Catalent Biologics network to build a true global leader in the
biologics market, which will help us to improve the lives of
patients around the world.”
Mr. Chiminski added, “This acquisition is also a recognition of
the hard work, dedication, and community spirit of the team who
have helped Cook Pharmica grow, and of the Bloomington area, which
is such a terrific home for this fast-growing business. We look
forward to strengthening Cook Pharmica’s partnership with the
community in the years to come as we further strengthen our
leadership position in biologics.”
Catalent Biologics currently offers a global site network,
including a state-of-the-art biologics development and
biomanufacturing facility in Madison; fill-finish services in
Brussels, Belgium and Limoges, France; SMARTag® conjugation
technology in Emeryville, California; and a network of biologics
analytical locations.
Cook Pharmica’s Bloomington facility has extensive
biomanufacturing capacity and deep expertise in sterile formulation
and fill/finish across liquid and lyophilized vials, prefilled
syringes, and cartridges. It perfectly augments Catalent’s
expertise in cell line engineering, bioconjugate development,
analytical services, biomanufacturing, prefilled syringe, and
blow/fill/seal technologies.
Upon completion, Cook Pharmica’s over 750 associates, including
its experienced executive team, will join Catalent’s network of
more than 30 sites across five continents with more than 10,000
team members and complement Catalent’s existing biologics
capabilities, alongside its other leading capabilities in oral,
inhalation, and consumer health.
The completion of the transaction is subject to customary
closing conditions, including approval from regulatory authorities,
and is expected to occur in the fourth quarter of this calendar
year.
Transaction Details
The acquisition is an-all cash transaction, which Catalent
expects to finance with new unsecured notes and equity. Upon
completion of the transaction, Catalent’s net leverage ratio, pro
forma for the transaction, is expected to be approximately 5.0x.
The acquisition is expected to be accretive to Catalent’s Adjusted
Net Income per share in the first full fiscal year following the
completion of the transaction.
Catalent has obtained committed financing, subject to customary
conditions, for the transaction from Morgan Stanley Senior Funding,
Inc., J.P. Morgan, RBC Capital Markets, and BofA Merrill Lynch. The
purchase agreement to acquire Cook Pharmica is not subject to any
financing condition. Catalent intends to file a Current Report on
Form 8-K with the Securities and Exchange Commission, which will
have further details concerning the transaction.
Morgan Stanley Senior Funding, Inc. is acting as lead arranger
for the financing of the acquisition. J.P. Morgan Securities LLC is
providing a fairness opinion to Catalent. Fried, Frank, Harris,
Shriver & Jacobson LLP is acting as legal counsel to
Catalent.
Conference Call and webcast
Catalent will host a conference call and webcast at 8:30 a.m.
EDT on Sept. 19, 2017 to provide more information on this
announcement. The webcast and accompanying slides can be accessed
at www.catalent.com/investors. An audio recording of the call will
be available in that section of the website for 90 days following
the call.
Notes for Editors
About Catalent
Catalent Inc. (NYSE: CTLT) is the leading global provider of
advanced delivery technologies and development solutions for drugs,
biologics and consumer health products. With over 80 years serving
the industry, Catalent has proven expertise in bringing more
customer products to market faster, enhancing product performance
and ensuring reliable clinical and commercial product supply.
Catalent employs approximately 10,000 people, including over 1,400
scientists, at more than 30 facilities across five continents, and
in fiscal 2017 generated over $2 billion in annual revenue.
Catalent is headquartered in Somerset, New Jersey. For more
information, visit www.catalent.com.
Non-GAAP Financial Measures
Use of Adjusted Net Income
Catalent management uses Adjusted Net Income/(loss) and Adjusted
Net Income/(loss) per share to measure operating performance.
Adjusted Net Income/(loss) is not defined under U.S. generally
accepted accounting principles, or “GAAP,” is not a measure of
operating income, operating performance, or liquidity presented in
accordance with GAAP, and is subject to important limitations.
Catalent believes that presentation of Adjusted Net Income/(loss)
and Adjusted Net Income/loss per share enhances an investor’s
understanding of its financial performance. Catalent believes this
measure is a useful financial metric to assess its operating
performance from period to period by excluding certain items that
it believes are not representative of its core business, and
Catalent uses this measure for business planning purposes. Catalent
defines Adjusted Net Income/(loss) as net earnings/(loss) adjusted
for (1) earnings or loss of discontinued operations, net of tax,
(2) amortization attributable to purchase accounting, and
(3) income or loss from non-controlling interest in its
majority-owned operations. Catalent also makes adjustments for
other cash and non-cash items, partially offset by its estimate of
the tax effects as a result of such cash and non-cash items.
Catalent believes that Adjusted Net Income/(loss) and Adjusted Net
Income/(loss) per share will provide investors with a useful tool
for assessing the comparability between periods of its ability to
generate cash from operations available to its stockholders.
Catalent’s definition of Adjusted Net Income/(loss) may not be the
same as similarly titled measures used by other companies. The most
directly comparable GAAP measure to Adjusted Net Income/(loss) is
net earnings/(loss).
Catalent does not provide a reconciliation of forward-looking
non-GAAP financial measures to their comparable GAAP financial
measures because it could not do so without unreasonable effort due
to the unavailability of the information needed to calculate
reconciling items and due to the variability, complexity, and
limited visibility of the adjusting items that would be excluded
from the non-GAAP financial measures in future periods. When
planning, forecasting, and analyzing future periods, Catalent does
so primarily on a non-GAAP basis without preparing a GAAP analysis
as that would require estimates for various cash and non-cash
reconciling items that would be difficult to predict with
reasonable accuracy. For example, equity compensation expense would
be difficult to estimate because it depends on Catalent’s future
hiring and retention needs, as well as the future fair market value
of Catalent’s common stock, all of which are difficult to predict
and subject to constant change. It is equally difficult to
anticipate the need for or magnitude of a presently unforeseen
one-time restructuring expense or the values of end-of-period
foreign currency exchange rates. As a result, Catalent does not
believe that a GAAP reconciliation would provide meaningful
supplemental information about Catalent’s outlook.
Forward-Looking Statements
This release contains both historical and forward-looking
statements, including concerning the closing of the agreement to
purchase Cook Pharmica and the financing that Catalent intends to
obtain to finance the initial purchase price. All statements other
than statements of historical fact are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements generally can be identified because they relate to the
topics set forth above or by the use of statements that include
phrases such as “believe,” “expect,” “anticipate,” “intend,”
“estimate,” “plan,” “project,” “foresee,” “likely,” “may,” “will,”
“would” or other words or phrases with similar meanings. Similarly,
statements that describe Catalent’s objectives, plans or goals are,
or may be, forward-looking statements. These statements are based
on current expectations of future events. If underlying
assumptions prove inaccurate or unknown risks or uncertainties
materialize, actual results could vary materially from Catalent’s
expectations and projections. Some of the factors that could cause
actual results to differ include, but are not limited to, the
following: antitrust or other regulatory actions that may delay or
interfere with the closing of the acquisition or result in other
changes to Catalent’s business; other unanticipated events that may
prevent a closing of the acquisition or may make it more difficult
to realize the anticipated benefits of the transaction; inability
to complete the anticipated financing on the anticipated terms, or
at all; participation in a highly competitive market and increased
competition may adversely affect the business of Catalent or of
Cook Pharmica; demand for Catalent’s or Cook Pharmica’s offerings
which depends in part on their customers’ research and development
and the clinical and market success of their products; product and
other liability risks that could adversely affect the results of
operations, financial condition, liquidity, and cash flows of
Catalent or Cook Pharmica; failure to comply with existing and
future regulatory requirements; failure to provide quality
offerings to customers could have an adverse effect on the business
and subject it to regulatory actions and costly litigation;
problems providing the highly exacting and complex services or
support required; global economic, political, and regulatory risks
to the operations of Catalent and Cook Pharmica; inability to
enhance existing or introduce new technology or service offerings
in a timely manner; inadequate patents, copyrights, trademarks, and
other forms of intellectual property protections; fluctuations in
the costs, availability, and suitability of the components of the
products Catalent and Cook Pharmica manufacture, including active
pharmaceutical ingredients, excipients, purchased components, and
raw materials; changes in market access or healthcare reimbursement
in the United States or internationally; fluctuations in the
exchange rate of the U.S. dollar and other foreign currencies
including as a result of the recent U.K. referendum to exit from
the European Union; adverse tax legislation initiatives or
challenges to Catalent’s tax positions; loss of key personnel;
risks generally associated with information systems; inability to
complete any future acquisitions and other transactions that may
complement or expand the business of Catalent or divest of
non-strategic businesses or assets and Catalent’s ability to
successfully integrate acquired business and realize anticipated
benefits of such acquisitions; offerings and customers’ products
that may infringe on the intellectual property rights of third
parties; environmental, health, and safety laws and regulations,
which could increase costs and restrict operations; labor and
employment laws and regulations; additional cash contributions
required to fund Catalent’s existing pension plans; substantial
leverage resulting in the limited ability of Catalent to raise
additional capital to fund operations and react to changes in the
economy or in the industry; exposure to interest rate risk to the
extent of Catalent’s variable rate debt and preventing Catalent
from meeting its obligations under its indebtedness. For a more
detailed discussion of these and other factors, see the information
under the caption “Risk Factors” in Catalent’s Annual Report on
Form 10-K for the fiscal year ended June 30, 2017, filed August 28,
2017 with the Securities and Exchange Commission. All
forward-looking statements speak only as of the date of this
release or as of the date they are made, and Catalent does not
undertake to update any forward-looking statement as a result of
new information or future events or developments except to the
extent required by law.
More products. Better treatments. Reliably supplied.™
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version on businesswire.com: http://www.businesswire.com/news/home/20170919005485/en/
For Catalent, Inc.Media:Elliott Berger, +1
917-650-3132elliott.berger@catalent.comorChris Halling, +44 (0)7580
041073chris.halling@catalent.comorRichard Kerns, +44 (0) 161 728
5880richard@nepr.euorInvestors:Thomas Castellano,
732-647-5013thomas.castellano@catalent.com
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