Patheon buys softgel specialist Banner in $255m deal
pharmafile | October 30, 2012 | News story | Manufacturing and Production |Â Â Capsugel, Patheon, banner pharmacapsÂ
Patheon has forged a deal to acquire gelatin capsule specialist Banner Pharmacaps for $255 million in a deal that boosts its formulation business.
Banner is the second-largest softgel manufacturer after Capsugel – which was sold by Pfizer to private equity firm KKR & Co last year in a $2.4 billion deal – and is currently owned by food manufacturer Vion.
Patheon said the deal would grow its contract manufacturing operations and pharmaceutical development services businesses, and also expand its presence in emerging markets, including Latin America.
The deal will help Patheon “build a $1 billion enterprise in a highly fragmented industry segment”, said the company’s chief executive James Mullen, and is in line with a 2011 strategy to become a “leader in oral dosage development and manufacturing services”.
Earlier this year, Patheon forged an alliance with Colombian capsule company Procaps to expand its manufacturing network and boost its presence in Latin America.
Softgels are growing in importance in the oral dosage form market because they are preferred by consumers, who often find them easier to take than traditional hard shell capsules or tablets.
The US softgel market alone was valued at $7.7 billion in 2011 and is growing at a compound annual rate of around 3%, according to Patheon.
Mullen said the deal would be accretive to earnings within two years and will allow for around $12.5 million a year in cost-savings.
Patheon said it had secured financing to the tune of $650 million from a variety of lenders, including Morgan Stanley, UBS, Credit Suisse and KeyBank, to help finance the deal, repay current debt and for general corporate purposes.
The company also raised its financial guidance for 2012, saying it expects earnings before income tax, depreciation and amortisation (EBITDA) of around $69 million on revenues of between $740 million and $745 million.
Phil Taylor
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