Lonza Launches Bid For Patheon

Lonza, a leader in the contract manufacture of active pharmaceutical ingredients, has made a non-binding bid to acquire Patheon, an Ontario-based contract manufacturer of drugs in their final dosage form. The Swiss firm's bid of $3.55 per restricted voting share values Patheon at $460 million.

"Our interest in Patheon is consistent with Lonza's stated strategy of expanding our offering across the pharmaceutical manufacturing value chain," says Lonza CEO Stefan Borgas. "An acquisition of Patheon would take us into the complementary activities of finished dosage development and manufacturing for both small-molecule and biological active ingredients."

Lonza's offer comes eight months into a contentious hostile takeover bid for Patheon by JLL Patheon Holdings, a group of investors that holds 39% of the Canadian firm and is offering $2.00 per share. Last month, the Ontario Superior Court of Justice rejected JLL's bid to oust directors elected to the Patheon board.

Paul Currie, chairman of a special committee of independent Patheon directors, says that while the committee favors Patheon continuing as an independent company over the JLL offer, it "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."

Patheon has agreed not to negotiate a transaction with any party other than Lonza until Sept. 30, though the terms allow Patheon to respond to unsolicited acquisition proposals. The Lonza bid does not commit either party to complete a transaction.

A deal with Patheon would mark a second giant step under Borgas away from Lonza's traditional business of bulk pharmaceutical manufacturing. The company made a significant expansion into other pharmaceutical services with the 2007 acquisition of Cambrex's research bioproducts and microbial biopharmaceutical businesses.