KKR's pharma sale caps a bumper year for European buyers

Lonza, which was advised by US investment bank Jefferies on the deal, is aiming to beef up its drug-delivery capabilities with the acquisition of Capsugel, which specialises in capsules.

The Swiss group said it can save Sfr45 million (£35 millon) a year in operating and tax costs from the tie-up, according to a statement from the firm announcing the deal on December 15.

KKR acquired the New Jersey-based capsule maker from Pfizer in 2011 for $ 2.4 billion, meaning it has more than doubled its money.

Pete Stavros, head of the industrials investing team at KKR, said in a statement that the firm had supported Capsugel’s management team in “repositioning the company from a global leader in hard capsules into a specialty contract development and manufacturing organization. Capsugel has grown significantly by investing in innovation, strategic acquisitions, product development and geographic expansion.”

For Jefferies, the deal represents its ninth $ 1 billion-plus M&A transaction in the past 12 months.

The banking group also said it is the biggest acquisition of a contract-development and management organisation — a pharmaceutical industry term for a company that develops and manufactures drugs for other pharma groups — in history.

Bank of America Merrill Lynch and UBS also have roles on the deal. They are providing debt financing for the full acquisition amount and underwriting Lonza’s planned Sfr3.3 billion equity raise. Goldman Sachs acted as sole adviser to Capsugel.

The deal takes the total value of US firms bought by European competitors in 2016 to $ 217 billion, according to Dealogic data, in 507 transactions. That is up from $ 211 billion for the whole of 2015, and is the most since the $ 258 billion recorded in 2000, shortly before the dotcom crash.

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