Cambrex Corporation (Cambrex) has entered into a definitive stock purchase agreement with Lonza Group AG (Lonza) for the sale of the businesses that comprise its bioproducts and biopharma segments (Bio Businesses), for total cash consideration of $460 million.
The company expects to realize net proceeds, after paying taxes and transaction- related costs, of approximately $450 million which will be used to repay all outstanding debt under the company's existing credit facility and to help fund a special dividend to stockholders. The sale of the Bio Businesses, which is subject to Cambrex stockholder approval and customary regulatory approvals, is expected to close in 90 to 120 days.
Following completion of the sale, Cambrex expects to pay a special dividend that will be funded by the net proceeds from the sale plus an additional $125 million to $150 million from new lines of credit that Cambrex expects to secure after closing. Assuming financing can be arranged on favorable terms at the currently anticipated levels, Cambrex expects the special dividend to be approximately $13.50 to $14.50 per share.
Cambrex currently has three business segments -- bioproducts, biopharma and Human Health. The bioproducts business manufactures and markets research, therapeutic and analytical testing products based on cell biology and used in drug discovery and biotherapeutic manufacturing. The biopharma business offers process development services and contract manufacturing under cGMP conditions for therapeutic proteins, vaccines and other biologic drugs. The human health business features a broad portfolio of products and services for process development and manufacturing of approximately 120 active pharmaceutical ingredients, advanced pharmaceutical intermediates and specialty intermediates for animal health, x-ray diagnostic and other applications. Combined 2005 sales from the Bio Businesses accounted for 42 per cent of the company's total gross sales of $452 million.
James A. Mack, chairman, president and chief executive officer of Cambrex Corporation, said: "We are pleased to announce the successful completion of this important phase of our strategic review. After a thorough and deliberate process, our Board of Directors determined that the sale of our Bio Businesses to Lonza represents the most compelling means for realizing value for Cambrex stockholders. In addition to receiving a substantial cash dividend, stockholders can look forward to additional benefits from their continuing investment in our strong Human Health business."
"Going forward, Cambrex will focus on growth opportunities in the markets we currently serve through our Human Health business. Our robust portfolio of products and services in value-added niches, coupled with our proven capabilities and first-rate regulatory record, uniquely position Cambrex to support both branded and generic manufacturers throughout the drug development life cycle. We are confident that our strong customer relationships and talented employee base give us a solid foundation for winning new business in the growing healthcare markets," continued Mack. "Concurrently, we will be working to aggressively reduce our corporate overhead in light of the decrease in both the size and complexity of Cambrex's operations. We expect these cost reductions and the ongoing benefits from the rollout of Lean Six Sigma programs to create additional value for our stockholders. Consistent with our fiduciary duties, we will also continue to evaluate strategic opportunities for the Human Health business as they arise."
Stefan Borgas, chief executive officer of Lonza, said: "For Lonza, this is the largest acquisition in our long company history and represents a significant commitment and leap forward toward achieving our long-time goal of becoming one of the world's leading suppliers to our existing and new customers in the pharmaceutical, healthcare and other life science industries. We are now closer to this goal than ever before."
The Bio Businesses transaction is not subject to any financing conditions and is subject to approval by Cambrex stockholders and customary regulatory reviews. Under the terms of the agreement with Lonza, Cambrex's Board of Directors may consider unsolicited superior acquisition proposals that include these businesses if presented between signing and stockholder approval, subject to a customary break-up fee.