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.™
For Catalent, Inc.
Media:
Elliott Berger, +1 917-650-3132
elliott.berger@catalent.com
or
Chris Halling, +44 (0)7580 041073
chris.halling@catalent.com
or
Richard Kerns, +44 (0) 161 728 5880
richard@nepr.eu
or
Investors:
Thomas Castellano, 732-647-5013
thomas.castellano@catalent.com