Lonza will buy Cambrex' Bioproducts and Biopharma segments for $460 million in cash, according to a definitive stock purchase agreement between the two companies. Lonza says that this marks the company’s largest acquisition. Subject to stockholder approval and customary regulatory approvals, Cambrex expects to close the transaction between January and February, 2007.
“After a thorough and deliberate process, our board of directors determined that the sale of our Bio Businesses to Lonza represents the most compelling means for realizing value for Cambrex stockholders,” says James A. Mack, chairman, president, and CEO of Cambrex.
After paying taxes and transaction-related costs, Cambrex expects to realize net proceeds of approximately $450 million, which the company says will be used to repay all outstanding debt under its existing credit facility. The company also plans to use this money plus an additional $125 million to $150 million from new lines of credit to pay a special dividend. If financing is arranged at the currently anticipated levels, Cambrex predicts that the special dividend will be approximately $13.50 to $14.50 per share.
Cambrex has three business segments: Bioproducts, Biopharma, and Human Health. The company reports that combined 2005 sales from the Bio Businesses accounted for 42% of the company's total gross sales of $452 million. The Bioproducts business manufactures and markets research, therapeutic, and analytical testing products, based on cell biology and used in drug discovery and biotherapeutic manufacturing. The Biopharma business offers process-development services and contract manufacturing under cGMP conditions for therapeutic proteins, vaccines, and other biologic drugs.
Upon completion of the transaction, Cambrex plans to reduce overhead by approximately $8 million per year. "Going forward, Cambrex will focus on growth opportunities in the markets we currently serve through our Human Health business," says Mack. “Our robust portfolio of products and services in value-added niches, coupled with our proven capabilities and first-rate regulatory record, uniquely position Cambrex to support both branded and generic manufacturers throughout the drug development life cycle."