Private-equity firm JLL Partners (JLL) and the Dutch chemical company Royal DSM announced a deal to create a new global contract development and manufacturing organization (CDMO) formed by combining Patheon Inc. with DSM Pharmaceutical Products (DPP). The name of the company (provisionally called NewCo) will be announced in the coming months, the companies report.
The new CDMO, with anticipated 2014 sales of about $2 billion (pro-forma) and 8300 employees, will offer services for finished drug products and active pharmaceutical ingredients through 23 locations across North America, Europe, Latin America, and Australia. The new company, which will operate independently, will be 51% owned by JLL and 49% by DSM.
As part of the transaction, JLL will contribute $489 million in cash to NewCo; DSM will contribute DPP and receive a seller note of $200 million, valuing DPP at $670 million. NewCo will acquire Patheon for $9.32 per share in cash, resulting in a total enterprise value for Patheon of approximately $1.95 billion. This represents a 64% premium to Patheon’s closing share price on Nov. 18, 2013.
Financing of $1.65 billion has been secured from J.P. Morgan, UBS, Jefferies, Morgan Stanley, and KeyBank. The transaction is expected to close in the first half of 2014, at which time DSM will deconsolidate DPP and Patheon's Restricted Voting Shares will no longer be traded publicly.
Jim Mullen, currently CEO of Patheon, will be appointed CEO of NewCo upon completion of the transaction. Mullen joined Patheon in 2011 as CEO. Prior to joining Patheon, he served as CEO and president at Biogen Idec from 2003 to 2010.