Pfizer Inks Capsugel SalePfizer Inks Capsugel Sale
April 4, 2011
PEAPACK, N.J.Pfizer has followed through on its goal to find an alternative home for its Capsugel business unit, which it had previously said is poised to best grow outside of the Pfizer family, selling the capsule and delivery form supplier to Kohlberg Kravis Roberts & Co L.P. (KKR) for $2.375 billion in cash. Pfizer said it would buy back some $5 billion of its own stock with the proceeds from the transaction, which should close in third quarter, subject to customary approvals.
In late 2010, Pfizer announced it was seeking strategic alternatives for the Capsugel unit, which it said was a unique business with strong potential for growth outside of Pfizer. It is no secret Pfizer is also streamlining its business, and many analysts expect the drug maker to spin off other business units that arent its high-profit core business focus.
Capsugel, which generated $750 million in revenues and manufactured 180 billion hard capsules in 2010, is expected to maintain its U.S. presence and New Jersey headquarters, and all Pfizer employees currently dedicated to the Capsugel business will remain with Capsugel. Guido Driesen will remain president and general manager of Capsugel.
The transaction is an endorsement of Capsugels consistent success to date and its potential for future growth with KKR, a firm with deep industry expertise and a long history of partnering with market-leading businesses to take them to the next level, Driesen said. Capsugels employees and I are excited to work with KKR and eager to enhance the value of our business in partnership with our customers.
Henry R. Kravis and George R. Roberts, co-founders, -chairmen and -CEOs of KKR, lauded Capsugels excellent portfolio and outstanding reputation for top-notch and innovative delivery solutions. We share Capsugels enthusiasm for its future potential to grow, develop and continue to deliver an unmatched quality of products.
KKRs 34-year history includes 185 investment transactions for a total of more than $435 billion. Its 60 portfolio companies have generated more than $210 billion of annual revenues and maintain more than 900,000 employees. The firms investment in Capsugel represents slightly more than three-times the amount of the capsule suppliers annual sales. Bloomsberg News noted this is the second-largest acquisition for KKR the past year, behind a November 2010 deal to buy Del Monte Foods Inc. for $5.3 billion including debt.
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