Swiss contract manufacturing organisation (CMO) Lonza has put in a bid to buy fellow manufacturer and delivery tech firm Catalent, Reuters wrote yesterday citing people familiar with the matter.
A spokesman from Lonza told this publication it does “not comment on market speculations,” while a spokesman from Catalent sent us a similar statement
William Blair analyst John Kreger said: “This sort of combination would make strategic sense.”
He wrote in a note that “Catalent is a market leader in a number of advanced drug delivery technologies—particularly for small molecules,” and has expanded its offerings over the past few years through its own growth and M&A strategy.
The firm, for example, acquired particle size engineering tech firm Micron Technologies and bioconjugation experts Redwood Bioscience in 2014, and has been growing its oral dosage network through various deals and expansions.
Meanwhile, Kreger noted, “Lonza, in contrast, is a leader contract biologic manufacturing,” and while Catalent has a single-use biologics facility in Madison, Wisconsin – acquired from GE Healthcare in 2011 – “the company has relatively little exposure to biologics, and this has been noted as a key M&A target.”
If a deal was to be made, it would be the latest example of consolidation in a sector currently deemed ripe for consolidation, and likely to be larger than the $2.65bn merger of rival Patheon with Royal DSM’s pharmaceutical products business in 2014.
Kreger believes $35 would be a reasonable per share take-out price, which would value the company at close to $1.5bn.
According to Reuters, the firms have failed to agree on a price, and Lonza may decide to pursue other targets.