Lonza sharpens pharma focus with CHF4.2B sale of Specialty Ingredients to Bain Capital and Cinven

10 Feb 2021 --- Lonza’s Specialty Ingredients business has been acquired by Bain Capital and Cinven for an enterprise value of CHF 4.2 billion (US$4.7 billion).

“The free cash flows resulting from the sale will allow Lonza to accelerate its strategic priorities and dedicate its focus to the pharma and biotech industry, providing services for manufacturing a wide range of products and modalities,” Albert Baehny, chairman of Lonza, tells NutritionInsight.

“The sale will allow Lonza to focus on its position as a leading partner to the healthcare industry. However, certain nutrition ingredients (such as UC-II and Carnipure) are a part of the Capsules and Health Ingredients segment and are not part of the Specialty Ingredients divestment,” he explains.

The transaction is expected to close in H2 2021, subject to customary closing conditions.

The ownership transfer process is expected to be smooth. Bain Capital and Cinven have confirmed that high standards of service delivery and quality for customers will remain a priority following closing. 

Lonza shifts focus
Last October, Lonza established a new structure and culture for its businesses. The company now has a dedicated focus on the pharma and biotech industry and has introduced a structural and cultural blueprint set to create a harmonized “one business” identity. 

Lonza will accelerate its strategic priorities and dedicate its focus to the pharma and biotech industry.The news comes after Lonza reported a “strong” performance for its 2020 financial year. Notably, the Capsules & Health Ingredients segment benefited from increased demand for nutritional supplements caused by the COVID-19 pandemic.

“We are investing significantly in our Capsules and Health Ingredients Division, increasing capsule production capacity across our global manufacturing and supply chain network,” Baehny says.

“In October 2020, we announced a US$93 million investment to expand our overall production capacity of capsules within the Capsugel portfolio by 30 billion capsules annually. We are planning to bring these assets online before the end of 2021.”

A smooth transition
Both Bain Capital and Cinven have experience in the industrials sector and an established track record of successful investments in portfolio companies, Lonza says. 

The two private equity bidders showed strong and sustained interest since the beginning of the official sale process, thereby confirming that they are a good choice for the business and the right transaction partner for Lonza.

Lonza’s Specialty Ingredients business operates across 17 manufacturing sites globally and has approximately 2,800 permanent employees. The business is a leading provider of microbial control solutions for Professional Hygiene and Personal Care products. 

It also offers the custom development and manufacturing of specialty chemicals and composites to support the electronics, aerospace, food and agrochemical industries.

“All current Specialty Ingredients customers will continue to be served by the Specialty Ingredients business for the current time. We look forward to continuing to collaborate with Bain Capital and Cinven to ensure a seamless transition for customers and employees,” Baehny underscores.

“The move is the result of a comprehensive and robust selection process. Bain Capital and Cinven have shown they understand the value of the experience and expertise of our Specialty Ingredients employees.” 

He adds that the investors are also keen to prioritize R&D and innovation, as well as to invest in existing facilities to unlock the potential of the business.

For the deal, BofA Securities and UBS are acting as joint financial advisors to Lonza. 

Lonza will also exit the softgel arena in the pharma market, as well as in the consumer health and nutrition market, following the imminent sale of two of its production sites to NextPharma. 

By Kristiana Lalou