Pharma: Novo Holdings acquires contract manufacturer Catalent

Last Updated: 6. Februar 2024By

As a subscriber to my takeover sensor, you know that takeovers in the pharmaceutical and biotechnology sector are particularly spectacular. Here, mega-deals, meaning takeover agreements beyond the billion-dollar mark, are regularly concluded.

But this market is also particularly interesting for investors who have invested in stocks of the acquired companies. Because in hardly any other market are takeover premiums regularly paid that exceed the 50% mark.

And yesterday (05/02/2024) it happened again: Novo Holdings A/S, the parent company of Danish diabetes specialist Novo Nordisk A/S, announced that it wants to acquire US medical contract manufacturer Catalent, Inc. in a cash transaction.

The deal values Catalent at an incredible $16.5 billion (USD – equivalent to approximately €15.4 billion). But before I go into further details of the takeover agreement signed by both parties, I would like to introduce the companies involved to you.

The companies involved in a brief profile Novo Holdings is a holding and investment company responsible for managing the assets and assets of the Novo Nordisk Foundation. The holding is a majority shareholder of Novo Nordisk A/S and Novonesis A/S and manages an investment portfolio with long-term return prospects.

In addition to managing a broad portfolio, Novo Holdings is a leading global investor in the life sciences sector. At the end of 2022, Novo Holdings had total assets of €108 billion.

Novo Nordisk is a leading global healthcare company founded in 1923 and headquartered in Bagsværd, Denmark (approximately 14 km northwest of Copenhagen).

The Danish pharmaceutical company is a world leader in diabetes, but also develops drugs for the treatment of chronic diseases such as obesity and rare blood and hormonal disorders.

Currently, Novo Nordisk is in the media because of its weight loss injections Ozempic, which are actually intended for the treatment of diabetes, and Wegovy. Various celebrities like Elon Musk, Kim Kardashian, and Donald Trump are said to have shed some excess pounds with the help of these injections.

Due to the continued high demand for the two weight loss injections, there have even been supply shortages at Novo Nordisk. One thing is for sure, though: The Danish pharmaceutical giant is making a lot of money from the weight loss injections.

Novo Nordisk employs around 63,000 people in 80 countries and distributes its products in approximately 170 countries. In the 2023 financial year, the pharmaceutical giant generated revenue of DKK 232.3 billion (approximately €31.1 billion). Operating profit (EBIT) was DKK 105.2 billion (approximately €14.1 billion), an increase of 51% over the previous year.

Catalent, Inc. is a leading contract manufacturer for the pharmaceutical industry and is also active in the field of pharmaceutical contract research and development. The US company employs around 18,000 people at more than 50 locations worldwide, including over 3,000 scientists and technicians.

Catalent is headquartered in Somerset, New Jersey (80 km west of New York City). In the 2023 financial year, which ended on June 30, 2023, the company generated revenue of nearly $4.3 billion. Operating profit (EBIT) was -$156 million.

The takeover offer in detail Novo Holdings is offering Catalent shareholders $63.50 per share in cash. This values the contract manufacturer Catalent at a market value of $16.5 billion.

The purchase price represents a premium of 16.5% on the closing price of the Catalent share on February 2, 2024, the last trading day before the announcement of the takeover agreement. Based on the 60-day volume-weighted average price on February 2, 2024, the premium is even 47.5%.

Of the more than 50 global sites of Catalent, Novo Holdings plans to sell three Catalent filling locations acquired as part of the takeover to Novo Nordisk for $11 billion.

These three production sites specialize in the sterile filling of medicines and are located in Anagni (Italy), Brussels (Belgium), and Bloomington (Indiana, USA). The three locations employ more than 3,000 people and have been working with Novo Nordisk for some time.

This is how the stock market reacted The Catalent share price jumped 9.7% to $59.82 at the New York Stock Exchange yesterday. Today, the share rose a further 0.8% in pre-market trading to $60.30. The share price is now only slightly below the $63.50 offered by Novo Holdings. Investors obviously expect the takeover to proceed smoothly.

The Novo Nordisk shares also gained significantly yesterday. They rose 3.6% to DKK 809.80 on the Nasdaq Copenhagen, reaching a new all-time high.

This is how it can continue The companies involved expect the takeover to be completed by the end of 2024. The usual closing conditions still have to be met.

This includes the approval of Catalent shareholders and approvals from the relevant regulatory authorities. After the completion of the takeover, the shares of Catalent will be delisted from the stock exchange.