Catalent, a provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products, will acquire Paragon Bioservices, a viral vector development and manufacturing partner for gene therapies, for $1.2 billion.
“Paragon’s unparalleled expertise in the rapidly growing market of gene therapy manufacturing will be a transformative addition to our business that we believe will accelerate our long-term growth. Paragon brings to Catalent a complementary capability that will fundamentally enhance our biologics business and our end-to-end integrated biopharmaceutical solutions for customers,” said John Chiminski, Catalent’s chair and CEO.
Catalent has obtained a binding commitment for an incremental term loan facility, subject to customary closing conditions and the execution of definitive documentation, from JPMorgan Chase, which will act as lead arranger for the financing.
The definitive merger agreement for includes an all-cash purchase of all of Paragon’s outstanding equity for $1.2 billion on a cash-free, debt-free basis. Catalent intends to fund the transaction 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, although the acquisition is not subject to a financing condition.
Catalent will use the funds remaining from these financings, after the payment of the purchase price and the fees and expenses associated with the transaction, to pay a portion of the costs of capital expansion projects currently underway at Paragon’s facilities in Maryland, with the remaining costs to be paid with cash on hand. The incremental term loan and the issuance of the convertible preferred stock are each conditioned upon the closing of the acquisition.
Centerview Partners is serving as exclusive financial advisor to Catalent, and Fried, Frank, Harris, Shriver & Jacobson is serving as Catalent’s legal counsel. William Blair is serving as financial advisor to Paragon, with Kirkland & Ellis and Gordon Feinblatt serving as Paragon’s legal counsel. UBS Investment Bank is serving as exclusive financial advisor to LGP, and Latham & Watkins is serving as LGP’s legal counsel.
