European Commission Approves Acquisition of Capsugel by US Investment Fund KKR

Capsugel, the world leader in hard capsules and an innovator in drug-delivery systems, generated approximately $750 million in revenue and manufactured more than 180 billion hard capsules in 2010.

Jul 27 2011 --- The European Commission has cleared under the EU Merger Regulation the proposed acquisition of Capsugel by fund manager KKR. Capsugel manufactures dosage delivery products, such as hard gelatine capsules used for pharmaceutical products. The Commission's investigation showed that no horizontal overlaps arise from the transaction, since neither KKR nor any company that it controls are active in the same field as Capsugel.

The Commission also analysed potential vertical effects that might arise from the transaction, since KKR jointly controls Alliance Boots a UK-based pharmaceutical retailer, wholesaler and contract manufacturer active in the European Economic Area (EEA) and Alliance Boots purchases and uses dosage delivery products as an input for some of its products. However, Alliance Boots represents only a very limited part of the global or EEA demand for hard and soft gelatine capsules and alternative polymer capsules.

The Commission therefore concluded that the transaction would not significantly impede effective competition in the EEA or any substantial part of it.

Capsugel is a US based company that produces dosage delivery products, such as hard gelatine capsules used for pharmaceutical products. It supplies an important part of such gelatine capsules to the European pharmaceutical industry. KKR, of the US is a global alternative asset manager, investing in companies in a variety of sectors.

The transaction was notified to the Commission on 23 June.

Back in April, Pfizer and KKR announced that they had entered into an agreement whereby an affiliate of KKR will acquire Pfizer’s Capsugel business for $2.375 billion in cash. Capsugel, the world leader in hard capsules and an innovator in drug-delivery systems, generated approximately $750 million in revenue and manufactured more than 180 billion hard capsules in 2010.