Lonza makes bid for Patheon

Swiss pharmaceutical industry supplier Lonza is considering an offer of US$3.55 per share for Canadian firm Patheon, which is higher than the US$2 offered last December by majority shareholder JLL Patheon Holdings, and would value Patheon at US$460m.

Lonza said the deal, if completed, would take the company into the "complementary activities of finished dosage development and manufacturing for both small molecule and biologics - tablets through to sterile pre-filled syringes."

"With Patheon, Lonza would be in a unique position to offer its customers manufacturing capability across the complete supply chain," said Stefan Borgas, chief executive of Lonza. "It's an attractive deal that will be accretive within the second year after all integration costs have been taken off."

Borgas added that the offer was "only one of several alternatives that we've been pursuing for the last two years" and so far there have been "no detailed discussions with JLL".

Completion of the transaction is dependent on satisfactory due diligence and Lonza acquiring more than 67% of Patheon.

Paul Currie, chairman of Patheon's special committee of independent directors, said: "The Special Committee's view has been that Patheon continuing as an independent company is a more attractive alternative than the JLL offer."

"The special committee also believes that the Lonza proposal would provide an excellent opportunity to secure the successful future development of Patheon, and that it is in the best interest of all Patheon shareholders to explore the Lonza proposal further."

Borgas said Patheon's "very expensive acquisition" of a site in Puerto Rico had depressed its profits and a deal with Lonza would act as a catalyst to solve this. Patheon has already taken steps to turn this around by shutting the Carolina facility in Puerto Rico in February this year and shedding 1,000 jobs across its business. Borgas said the effect of these actions would only start to be seen next year and in 2011.

Patheon employs more than 4,000 people and provides contract development and manufacturing services to the pharmaceutical industry from pre-formulation to clinical packaging.

If a formal offer is made, it is expected that the deal will be completed in 2010.