Cambrex said today it has agreed to be acquired by an affiliate of the global investment firm Permira for approximately $2.4 billion, in a deal the company said will position it for further growth in the consolidating contract development and manufacturing organization (CDMO) sector.
“Cambrex will continue to invest aggressively in our commitment to our global customer base, where we are constantly looking at ways to provide the broadest possible range of world class services,” Cambrex president and CEO Steve Klosk said in a statement.
The Cambrex deal comes amid continuing consolidation among CDMOs—though two other acquisitions occurring this year were driven by growth in gene therapy manufacturing: Thermo Fisher Scientific bought viral vector CDMO Brammer Bio for $1.7 billion, while Catalent shelled out $1.2 billion for Paragon Bioservices, another viral vector CDMO. Both buyers expanded into the CDMO market two years ago: Thermo Fisher by acquiring Patheon for $7.2 billion, and Catalent by buying Cook Pharmica for $950 million.
“There has been considerable consolidation and expansion within the CDMO industry over the past few years with the goal being to create ‘one-stop-shops’ for companies developing biologics,” Steve King, CEO, Artius Bioconsulting, told GEN earlier this year. “From a customer perspective the main impact is fewer options with regard to CDMO service providers for individual development activities. While the concept of the one-stop-shop is attractive, the question is whether the big CDMOs can or will offer the value and capabilities across the different service offerings that emerging biotech companies need (i.e., they may be competitive for some development services and on the high end for other services).”
For Cambrex, the planned acquisition by Permira caps a year in which it expanded operations beyond small-molecule and generic drug substance manufacturing, entering the finished dosage form CDMO segment by purchasing Halo Pharma last year for approximately $425 million.
Cambrex also added comprehensive early-stage and analytical testing services, plus early-stage development capabilities for both advanced pharmaceutical ingredients (APIs) and finished dosage forms, by snapping up Avista Pharma Solutions for about $252 million in a deal completed January 2. The Avista deal brought Cambrex “a broad funnel of over 200 new customers for whom they work on hundreds of molecules,” Klosk told analysts on the company’s quarterly conference call February 13, according to a transcript published by The Motley Fool.
Cambrex acquired both companies from investment firms: Avista from Ampersand Capital Partners, and Halo from SK Capital Partners.
“A leading position”
Headquartered in East Rutherford, NJ, Cambrex focuses on research, development, and manufacture of small molecule therapeutics services for small molecule drug development, and provides drug substance, drug product, and analytical services across the entire drug lifecycle.
Cambrex offers a range of specialist drug substance technologies and capabilities including biocatalysis, continuous flow, controlled substances, solid state science, material characterization, and highly potent APIs. In addition, Cambrex said, it can support conventional dosage forms including oral solids, semi-solids, and liquids and can manufacture specialist dosage forms such as modified-release, fixed dose combination, pediatric, bi-layer tablets, stick packs, topicals, controlled substances, sterile, and non-sterile ointments.
“Over many years, Cambrex has built a leading position with best-in-class capabilities and facilities, backed by an excellent reputation for quality and technical expertise,” added Henry Minello, principal in the global healthcare group of Permira.
According to Permira’s website, its healthcare group has made 13 investments totaling €1.5 billion (about $1.7 billion) in equity in biotech, heavy medical equipment, hospitals, and veterinary medicine companies with a combined €1.1 billion ($1.2 billion) in sales.
“We look forward to partnering with Cambrex’s talented management and employees to support the growth of its integrated services offering,” Minello added.
Cambrex finished last year with net income of $92.418 million, on net revenue of $534.456 million, and reported first quarter net income of $10.409 million on net revenue of $159.456 million. Cambrex employs more than 2,000 people and operates from 13 locations in North America and Europe.
In addition to its headquarters, Cambrex operates North American facilities in Whippany, NJ; Charles City, IA; High Point and Durham, NC; Longmont, CO; Agawam, MA; and Mirabel, QC, Canada. The company’s European facilities are located in Karlskoga, Sweden; Paullo, Milan, Italy; Tallinn, Estonia; Wiesbaden, Germany; and Edinburgh, Scotland.
Expansion in Edinburgh
In Edinburgh, Cambrex will double to 15,000 square feet the footprint of its solid form screening and crystallization process development facility, and add to its lab space, under an expansion announced just last week on July 29. Cambrex said the expansion will nearly double its Edinburgh workforce from the current 50 employees by recruiting up to 40 more scientists, with potential for further growth in the future.
The additional laboratory space will allow Cambrex to install additional instruments and reactors for larger scale crystallization studies and solid form screening capabilities. The company said it also plans to install new ultra-performance liquid chromatography (UPLC) and gas chromatography instruments, as well as additional process analytical technology (PAT) tools. Fit out is expected to begin later this month, with a target completion date at year’s end.
Cambrex expanded into Edinburgh when it acquired Avista.
Under the merger agreement with Permira, Cambrex shareholders will receive $60.00 cash per share of Cambrex common stock, representing a 47.1% premium to the August 6 closing stock price of $40.78, and a 37.3% premium to the 60-day volume weighted average closing price preceding the announcement. The transaction will be financed through a combination of debt and equity financing.
However, the deal includes a 45-day “go-shop” period during which Cambrex may actively solicit acquisition proposals from third parties, and enter into or recommend a transaction with a prospective buyer making a superior proposal—a period that could in some circumstances be extended 15 days. Cambrex said it “does not intend to” disclose developments during that process unless and until the company’s board decides on any superior proposal it may receive.
Investors signaled their approval of the deal by sending Cambrex shares soaring 47% in early trading this morning, to $59.96 a share as of 10:37 a.m.