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Catalent Closes USD 1.2bn Acquisition of Gene Therapy Specialist Paragon Bioservices
Wednesday 22 May 2019

22 May 2019 - US-based drugs, biologics and consumer health products technology provider Catalent, Inc. (NYSE: CTLT) has completed the USD 1.2bn acquisition of Paragon Bioservices, Inc., a viral vector development and manufacturing partner for gene therapies, the company said.

With the addition of Paragon's specialised expertise in adeno-associated virus vectors, the most commonly used vector to deliver DNA to cells, Catalent is positioned to capitalise on strong industry tailwinds in the potentially USD 40bn addressable market for gene therapies.

Paragon also brings to Catalent its unique and differentiated scientific, development, and manufacturing capabilities, which will fundamentally enhance Catalent's biologics business and end-to-end integrated biopharmaceutical solutions for customers.

Paragon recently announced the opening of its new, commercial manufacturing center near the Baltimore-Washington International airport, which is equipped with several 500-liter and 2,000-liter single-use bioreactors for clinical through commercial material production.

The new large-scale production campus now combined with a recently leased second building which will be built out for commercial GMP manufacturing has the potential for more than 425,000 square feet of manufacturing space upon completion.

Paragon has GMP manufacturing projects underway with more than half of the top 40 leading gene therapy developers worldwide.

Catalent is committed to continuing the resource dedication for Paragon's customers and maintaining a flexible and reliable development and manufacturing partnership for its clients.

The company currently employs over 380 individuals at its two Baltimore-area sites, all of whom will join the existing Catalent team of over 11,000 employees.

In connection with the acquisition of Paragon, Catalent Pharma Solutions, Inc., as borrower, and certain other wholly owned subsidiaries of Catalent entered into an amendment, dated as of May 17, 2019, to its existing credit agreement with JPMorgan Chase Bank, N.A., as administrative agent and collateral agent, to provide for, among other things, USD 950m of incremental term loans and a USD 350m increase to its revolving credit facility.

The proceeds of the incremental term loans were used to fund a portion of the acquisition consideration and for general working capital purposes, to pay fees, costs and expenses incurred in connection with the transactions contemplated hereby, for capital expenditures of Paragon and to prepay a portion of the existing term loans.

Also in connection with the acquisition of Paragon, Catalent completed the issuance of USD 650m of a new series of convertible preferred stock to funds affiliated with Leonard Green and Partners, L.P. Effective as of the closing of the acquisition, Peter Zippelius, a partner at Leonard Green and Partners, joined Catalent's board of directors.

Catalent is a provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products.

The company employs over 11,000 people, including over 1,800 scientists, at more than 30 facilities across five continents, and in fiscal year 2018 generated approximately USD 2.5bn in annual revenue. Catalent is headquartered in Somerset, New Jersey.
Date Published: 22/05/2019
Target: Paragon Bioservices, Inc
Country: USA
Deal Size: 1.2bn (USD)
Sector: Biotechnology
Type: Corporate acquisition
Status: Closed
Buyer: Catalent, Inc