“We will continue to look at the value creation potential of all our businesses.”
Pfizer is selling its pill capsule and drug delivery business Capsugel to the private equity firm Kohlberg Kravis Roberts for $2.4 billion as part of an ongoing effort to refocus its business on drug discovery and development.
The all cash sale could be just the beginning of a string of divestments as the company reviews its business portfolio with the goal of concentrating its resources on its most profitable enterprises and defraying losses created by generic competition to some of its best-selling medicines.
“We will continue to look at the value creation potential of all our businesses,” Ian Read told investors during the company's fourth quarter 2010 earnings call. That review, Read said, would include a determination of where the units could “create the most value, be it inside or outside of Pfizer.”
Pfizer plans to use proceeds from the Capsugel sale to expand its repurchase of approximately $5 billion of shares planned for 2011.
As a result of the sale, Pfizer dropped $800 million from its anticipated 2011 and 2012 revenue projections, while maintaining all other elements of its financial guidance for those years.
Pfizer began its review of Capsugel in October 2010. The unit generated $750 million in revenue and manufactured more than 180 billion capsules in 2010, making it the world’s leading provider of hard capsules, according to the company.
Pfizer says that all employees working in the unit will be transferred with the new company and that Capsugel will maintain a corporate presence in the United States, with its global headquarters located in New Jersey.
KKR’s current private equity portfolio includes over 60 companies with more than $210 billion of annual revenues and more than 900,000 employees. The company is seeking to raise $1.5 billion in debt to fund the Capsugel buyout, according to Thomson Reuters.
The companies expect to complete the transaction in the third quarter of 2011, assuming they can secure required regulatory clearances and satisfy other closing conditions.
April 06, 2011
http://www.burrillreport.com/article-pfizer_sells_capsugel_to_kkr_for_2_4b.html