Novo Holdings, the foundation asset manager that controls Novo Nordisk, agreed to acquire contract production and progression organization (CDMO) Catalent for $16. 5 billion, with the client to recoup two-thirds of that spend by promoting three of Catalent subsidiaries. Novo Nordisk (AP) — Novo Nordisk sites will receive $11 billion up front to meet growing demand for its best-in-class obesity drugs Wegovy® and diabetes drug Ozempic®, they said today.
The 3 sites, consisting of amenities in Bloomington, IN; Brussels, Belgium; and Anagni, Italy, employ more than 3,000 people in total, or about one-sixth of Catalent’s global total of more than 18,000 people, totaling 3,000 scientists and technicians.
All three belong to Catalent’s network of more than 50 locations around the world and have what Novo Nordisk described as ongoing collaborations with the company. “Following closing, Novo Nordisk will meet all obligations of its customers at the three Catalent sites acquired through Novo Nordisk. ” Novo Nordisk said.
Catalent agreed to the sale after a review of its business, strategy and operations, as well as its capital allocation priorities, through a committee of its Board of Directors. The board agreed to the review after Catalent added 4 new independent administrators subsidized through an activist investor. Elliott Investment Management, for a proxy war and facing the percentage value drop that caused Catalent’s percentages to drop 48% from $92. 28 on August 30, 2022 to $47. 81 on August 29, 2023, the day Catalent and Elliott reached an agreement. Part of that drop came after Catalent rattled investors and analysts in May 2023 by revealing that it planned to particularly reduce its net sales and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for fiscal 2023, each through more than $400 million. . .
Elliott and certain affiliated entities have agreed to vote their Catalent common stock in favor of the acquisition through Novo Holdings, which will strip CDMO of its equity.
“We believe that this transaction, which is the culmination of a process led by the Strategic and Operational Review Committee of the Catalent board, clearly maximizes value for Catalent stockholders,” Marc Steinberg, Partner at Elliott Investment Management, said in a statement. “We commend Catalent’s board and management team for delivering this outstanding outcome.”
Catalent is ranked third on GEN’s most recent A-list of the “Top 10 Contract Development and Manufacturing Organizations,” published last September. Like many CDMOs, Catalent has noticed biopharmaceutical corporations scaling back their progression and production activities following a surge that followed the years-old race to bring COVID-19 drugs and vaccines to market.
“Lots of questions for existing clinical clients related to implications, timelines, pricing, staffing, etc. Nicole K. Paulk, PhD, CEO, Founder, and President of Siren Biotechnology at X, formerly Twitter, posted today. It’s huge! I don’t care about Wegovy, Catalent is the world’s largest #AAV #GeneTherapy CDMO and the only one with business experience.
Novo Nordisk agreed to acquire Catalent’s three facilities in a bid to address bottlenecks at Wegovy and Ozempic, both of which involve the active element semaglutide, which the metabolic drug giant attributed to the sharp expansion in sales of those drugs.
Releasing its fourth-quarter and full-year 2023 effects last week, Novo Nordisk announced that Wegovy’s sales more than quintupled in 2023, reaching 31. 343 billion Danish kroner ($4. 515 billion), up from 6. 188 billion Danish kroner ($891. 316 billion) in 2022. It almost doubled, up 60% to DKK 95. 718 billion ($13. 787 billion), from DKK 59. 75 billion ($8. 606 billion).
Overall, Novo Nordisk finished 2023 with a 51% jump in net profit, to DKK 83.683 billion ($12.042 billion) from DKK 55.525 billion ($7.99 billion) a year earlier. The company reported net sales of DKK 232.261 billion ($33.421 billion), up 31% from DKK 176.954 billion ($25.462 billion) in 2022.
“We are very pleased with the agreement to acquire the three Catalent manufacturing sites which will enable us to serve significantly more people living with diabetes and obesity in the future,” stated Lars Fruergaard Jørgensen, Novo Nordisk’s president and CEO. “The acquisition complements the significant investments we are already doing in active pharmaceutical ingredients facilities, and the sites will provide strategic flexibility to our existing supply network.”
Catalent said it plans to report the effects of the fiscal moment of the 2024 quarter on Friday. The company will hold an earnings conference call due to the acquisition of Novo Holdings.
Novo Holdings said its agreement to acquire Catalent is consistent with its strategy of making an investment in established life sciences corporations with strong long-term potential.
“With our experience and track record in making investments in high-quality life sciences companies, Catalent is a very smart strategic choice,” said Kasim Kutay, CEO of Novo Holdings. “As committed investors committed to productive relationships with all of our partners, we look forward to working with the Catalent team to realize the company’s full potential.
Investors signaled support of the deals with a buying surge that sent Catalent shares up 10% today on the New York Stock Exchange, from $54.51 to $59.82. Shares of Novo Nordisk traded on Nasdaq Copenhagen rose about 4% to DKK 809.80 ($116.67).
On Thursday, Louise Chen, an analyst at Cantor Fitzgerald, raised her 12-month value target for Novo Nordisk stock by 17%, from $120 to $140, and maintained her company’s “overweight” score on the stock.
Novo Holdings agreed to acquire all outstanding shares of Catalent for $63.50 per share cash, a premium of 16.5% to the closing price of Catalent’s common stock on Friday, and a 47.5% premium to the 60-day volume-weighted average price as of Friday. The purchase price also represents a premium of 39.1% to the closing price of Catalent’s common stock on August 28, the last trading day before Catalent announced that its board formed a Strategic and Operational Review Committee to conduct a review of Catalent’s business, strategy and operations, as well as Catalent’s capital-allocation priorities with a view towards maximizing value for all Catalent stockholders.
Novo Nordisk said the acquisition of Catalent’s sites is expected to have a single-digit negative effect on operating profit expansion this year and next. The acquisition will be financed primarily through debt, so Novo Nordisk’s previously announced 20 billion DKK ($2. 877 billion) percentage buyback plan will not be affected, the company added.
Catalent’s board of directors unanimously approved the acquisition, which is expected to close by the end of 2024, subject to standard final conditions, adding the approval of Catalent’s shareholders and receipt of required regulatory approvals.
Once the deal closes, Catalent will continue to operate independently and from Novo Holdings and Novo Nordisk, the corporations said.
“This transaction is a testament to our team’s hard work and dedication to this mission, and I am incredibly excited for this next step in our journey,” stated Alessandro Maselli, Catalent’s president and CEO. “We look forward to benefiting from Novo Holdings’ significant resources to accelerate investment in our business and enhance key offerings as we continue to offer premium development and manufacturing solutions for pharma and biotech customers.”