Catalent to Acquire Paragon Bioservices for $1.2 Billion

17th April 2019

Catalent to Acquire Paragon Bioservices for $1.2 Billion

US drug developer Catalent has agreed to acquire compatriot Paragon Bioservices for $1.2 billion in cash on a debt-free basis.

The transaction, expected to close at the end of the second quarter, is subject to customary closing conditions, including the expiration of the waiting period under US antitrust law.

Based at Baltimore, Maryland, Paragon currently belongs to private equity investors Camden Partners and NewSpring Capital. The company specializes in adeno-associated virus (AAV) vectors, the most commonly used delivery system for gene therapy, as well as unique capabilities in GMP plasmids and lentivirus vectors.

Catalent said Paragon’s expertise with adeno-associated virus vectors, plasmids and lentivirus vectors will position Catalent firmly to capture some of the $40 billion gene therapy market.

With the integration of Paragon, Catalent will gain a complementary capability that will fundamentally enhance its biologics business and its end-to-end integrated biopharmaceutical solutions for customers, said John Chiminski, Catalent’s CEO.

The gene therapy market is expected to have sustained growth of 25% in the medium term, and as an industry leader, Catalent said Paragon can be expected to outpace the market’s growth “for the foreseeable future.” Sales of the Maryland firm are projected to exceed $200 million in revenue in 2019, with nearly 90% of the target said to be already reflected in signed contracts.

Catalent intends to fund the acquisition with the proceeds of a $650 million incremental term loan under its existing senior secured credit facilities and the issuance of $650 million of a new series of convertible preferred stock to funds affiliated with Leonard Green & Partners (LGP). JPMorgan Chase Bank will act as lead arranger.

In part, the funds will also be used to defray the cost of expansion projects currently underway at Paragon's facilities in Maryland.
The incremental term loan and the issuance of the convertible preferred stock are each conditioned upon the closing of the acquisition, Catalent said.

Following integration of Paragon and its 380 employees into the new owner, the CDMO will continue to be led by Pete Buzy. In conjunction with the investment in Catalent by the LGP funds, LGP partner Peter Zippelius will join Catalent's board of directors.

Photo: © Paragon
US drug developer Catalent has agreed to acquire compatriot Paragon Bioservices for $1.2 billion.

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