Cambrex Corporation, a manufacturer of small molecule innovator and generic Active Pharmaceutical Ingredients (APIs), has entered into a definitive agreement to acquire Halo Pharma, a dosage form Contract Development and Manufacturing Organization (CDMO), majority owned by funds managed by the private investment firm SK Capital Partners, for approximately $425 million.
With the acquisition of Halo, Cambrex will enter the large and growing finished dosage form CDMO market. Halo provides drug product development and commercial manufacturing services, specializing in oral solids, liquids, creams, sterile, and non-sterile ointments.
Halo’s core competencies include developing and manufacturing highly complex and difficult to produce formulations, products for pediatric indications, and controlled substances. Cambrex’s acquisition of Halo creates a leading small molecule CDMO with a broad range of capabilities and a robust customer base.
“Halo’s expertise in oral solids, liquids, creams and ointments fits well with our small molecule API business and brings a substantial new customer base and pipeline of small molecule products,” Steve Klosk, president and CEO of Cambrex, said. “We believe the combination of Cambrex and Halo will attract new customers to the combined company and allow us to more efficiently broaden our pipeline of products, while continuing to capitalize on the rapidly-growing pharmaceutical services market.”
Halo operates two GMP compliant facilities located in Whippany, NJ, and Montreal, Québec, Canada, comprising 430,000 square feet of plant space. The company currently is engaged in about 100 product development projects and is expected to generate more than $100 million in annual revenue in 2018. Halo’s 450-person workforce will join Cambrex’s 1,200 employees across the United States and Europe.
Cambrex will acquire Halo for $425 million in total cash consideration. The acquisition will be funded with a combination of cash on hand and borrowings against Cambrex’s $500 million senior credit facility. Upon completion of the transaction, Cambrex’s net leverage ratio, pro forma for the transaction, is expected to be about 1.2x. Cambrex expects the transaction to be accretive in 2019.
Completion of the transaction is subject to customary closing conditions and is expected to occur during the third quarter of 2018.
RBC Capital Markets LLC is acting as exclusive financial advisor to Cambrex and Ropes & Gray LLP and Fasken are serving as legal counsel.
Wells Fargo Securities, LLC is acting as lead financial advisor to Halo, with Mizuho Securities USA, LLC acting as co-advisor. Morgan, Lewis & Bockius LLP is serving as legal counsel to Halo.
(Source: Cambrex Corporation)