US life science chemicals company Cambrex plans to sell off its Rutherford Chemicals business for $64 million (€56m), in a move that will allow it to focus on its human health and biosciences activities.
"This transaction is a major milestone on our path towards completing the transition from a specialty chemical company to a life sciences company," commented James Mack, Cambrex' president and chief executive.
Rutherford, which makes speciality and fine chemicals for industrial applications, will be sold to private equity firm Arsenal Capital Partners in a cash deal that should close in the next 46 to 65 days, according to Cambrex.
The proceeds of the transaction will be used to pay off outstanding debt at a time when Cambrex says it plans to "accelerate organic growth and pursue strategic acquisitions in the biotechnology and pharmaceutical markets." Overall, the company expects to record a net loss of $50 million on the deal.
As part of the deal, Arsenal will purchase the stock of Rutherford's UK subsidiary, Seal Sands Chemicals, which manufactures a wide range of performance enhancing synthetic organic fine chemicals for the pharmaceutical, agrochemical, polymer and photographic industries.
In the second quarter, Rutherford's sales rose 4.5 per cent to $33.3 million, but gross profit fell 46 per cent to $3.4 million as a result of an insurance settlement, an unfavourable mix of products and higher raw material costs. Cambrex's total second-quarter sales were $136.4 million, while earnings totalled $8.1 million.
Meanwhile, Cambrex's contract manufacturing facility in Karlskoga, Sweden, has started producing an intermediate used in the production of Genzyme's Renagel (sevelamer hydrochloride) product for treating elevated blood phosphate levels in patients undergoing dialysis for end-stage renal disease.
Cambrex has been making the intermediate for Genzyme at its US facility in Charles City, Iowa, since 1997, but growth in sales of the product has meant that production capacity needed to be expanded. Genzyme also wanted production to take place nearer its new bulk active pharmaceutical intermediate manufacturing facility in Haverhill, UK.