DSM Announces Business Merger
November 22, 2013
The Daily Reflector
A major pharmaceutical manufacturer located in Pitt County will be part of a multi-billion dollar business merger expected to create a new and more competitive player in the global pharma market, according to a corporate announcement issued on Wednesday.
JLL Partners, a leading middle-market private equity firm, and Royal DSM, the global life sciences and materials sciences parent company of Greenville-based DSM Pharmaceuticals, announced the creation of a new company, which will be a leading global contract development and manufacturing organization for the pharmaceutical industry, the news release said.
The new company, which name will be announced in a few months, is expected to generate annual sales of $2 billion, according to the corporate announcement. The company will be 51-percent owned by JLL and 49-percent owned by Royal DSM.
The new company will be formed by combining Royal DSM’s business group, DSM Pharmaceutical Products, parent of the Greenville-based location, with Durham-based Patheon Inc., the release said. JLL will contribute $489 million in cash to the new company, and Royal DSM will receive $200 million, thereby valuing DPP at $670 million, according to the news release.
Committed financing has been secured from J.P. Morgan, UBS, Jefferies, Morgan Stanley and KeyBank, the officials said. Subject to customary conditions, the transaction is expected to close during the first half of 2014.
The company will have an end-to-end offering of drug products and active substances and a global footprint of 23 locations across North America, Europe, Latin America and Australia with about 8,300 employees.
Royal DSM will deconsolidate DPP after closing, according to the statement.
“Fully in line with our strategy, this is for DSM Pharmaceutical Products the perfect way to accelerate growth and for DSM to maximize value for this business,” Feike Sijbesma, CEO and Chairman of the Royal DSM Managing Board, said. “I am convinced that (the new company) as a standalone company will be able to create substantial value as a standalone. With this partnership DSM has made a key step in the strategic transformation of its pharma activities into partnerships while creating maximal value for all stakeholders.“
Stefan Doboczky, Member of the DSM Managing Board and responsible for the Pharma cluster, said DSM’s customers, who bring life-saving and life-enhancing medicines to people who need them around the world, will greatly benefit from the new company’s depth and breadth of capabilities and services.
“I am convinced that (the new company) will be even better positioned to help customers succeed with their unique needs,” Doboczky said.
Greenville corporate officials declined to comment on the transaction or expectations for its impact.