Shopping for manufacturing

Happy Monday. Here’s what we’ve got today…

• A look at Novo Holdings’ purchase of CDMO Catalent

• The deal sheet, plus the business of credit card rewards

Novo Holdings agreed to acquire pharmaceutical contract development and manufacturing organization Catalent in a deal that values the business at $16.5 billion, including debt. The purchase price represents a 16.5 percent premium to the prior closing price and a nearly 40 percent premium to August 28th’s closing price, the last day of trading prior to Catalent’s announcement of a strategic review.

Novo Nordisk’s Supply Struggles

Novo Holdings is a holding company and investment firm set up to manage the assets of the Novo Nordisk Foundation, whose $114 billion endowment makes it the world’s largest philanthropic organization.

Alongside various healthcare-focused public and private investments, Novo Holdings holds a controlling interest in pharmaceutical company Novo Nordisk.

As part of the Catalent deal, Novo Nordisk has agreed to pay its parent company $11 billion to acquire three Catalent manufacturing facilities in Italy, Belgium, and Indiana. Novo Nordisk and Catalent already work together at the three fill-finish production sites, which help produce the company’s GLP-1 weight loss drugs Ozempic and Wegovy.

GLP-1 demand has far outpaced supply, forcing Novo Nordisk to limit drug access as it works to ramp up production—the company had previously announced a $6 billion manufacturing capacity investment initiative, which today’s deal should accelerate.

Such efforts now have added urgency following the FDA’s November approval of Eli Lilly’s Zepbound, a similar compound that will likely further strain available GLP-1 outsourced capacity.

Novo Holdings will retain the remainder of Catalent’s nearly 50 sites, which have capabilities across small-molecule, biologics, and cell and gene therapies. With a deep life sciences portfolio, readily available access to manufacturing capacity could provide portfolio companies with some level of competitive advantage. That may be particularly true for emerging cell and gene therapies, a more complex category with manufacturing outsourcing rates nearing 70 percent (well above industry averages).

Catalent’s Resolution

Today’s announcement comes five months after the launch of Catalent’s strategic review, prompted by an approach from activist investor Elliott Management (who had negotiated for a seat on the company’s board).

Elliott’s involvement followed a string of challenges at Catalent, including executive turnover, delays in financial reporting, and a series of manufacturing mishaps. Relative to peers, the business was also particularly exposed to the fall-off in Covid-related business: 2023 revenue fell by nearly $540 million to $4.3 billion, with almost all the decline attributed to the company’s biologics division that produces Covid treatments and vaccines.

The timing of Catalent’s unraveling made it even more of a setback for shareholders than it otherwise might have been. Last year, life sciences business Danaher was rumored to be nearing a deal to acquire the company at a “significant premium.” It shelved those plans shortly after Catalent disclosed “productivity issues” at three major facilities.

Elliott’s stake was first reported by the Wall Street Journal in late July. From the date of that story, Novo’s offer implies a nearly 40 percent return to common, though Elliott’s actual performance likely differs. In response to today’s announcement, Elliott partner Marc Steinberg issued a statement saying the firm “fully supports” the transaction.

The deal is expected to close by the end of 2024. Citi, J.P. Morgan, and Skadden, Arps advised Catalent, while Jones Day advised Catalent’s board. Morgan Stanley and Goodwin advised Novo Holdings, and Evercore advised Novo Nordisk on the facilities purchase.

• Blackstone, in partnership with company chairman Reinold Geiger, is considering a bid for skin-care company L’Occitane International, currently trading at a $4.9 billion market value, per Bloomberg.

• A group of Russian investors has agreed to acquire Yandex's (Nasdaq: YNDX) Russian assets for $5.21 billion.

• TotalEnergies is preparing to sell a 50 percent stake in its U.S. and European renewable energy projects, whose total value is around $2.5 billion, per Reuters.

• Merck & Co. (NYSE: MRK) has agreed to acquire the farmed fish health products business of Elanco Animal Health (NYSE: ELAN) for $1.3 billion.

• Investindustrial, in partnership with the Bagnoli family, acquired FdA Group, an Italian pastry producer, from BC Partners for €1.1 billion.

• Thoma Bravo agreed to acquire Everbridge Inc. (Nasdaq: EVBG), a provider of critical event management and enterprise safety software, for $1.5 billion.

• H.I.G. Capital is preparing to sell Usalco, a provider of specialty chemicals products, in a deal that could be worth $2 billion.

• Whites Group has agreed to invest up to $1 billion ($500 million each) in Fanhua, a Chinese insurance brokerage, and Puyi, a wealth management firm.

• PAI Partners is preparing for a potential sale of Marcolin, an Italian eyewear brand, per Reuters.

• Metcash has agreed to acquire Superior Food, a food and grocery products provider, from Quadrant Private Equity for A$412 million.

• Comfort Systems USA (NYSE: FIX) acquired Summit Industrial Construction from The Stephens Group.

• Diagnosticos da America, a publicly-listed Brazilian healthcare diagnostics company trading at a $1.1 billion market value, is considering strategic alternatives, including a sale of the company.

• Fosun International is considering a sale of its 10 percent stake in Ageas, a listed European insurance company, which would be valued at around $800 million.

• Bain Capital agreed to acquire Accolade Wines, an Australian wine producer, from Carlyle.

• Investcorp made a minority investment in secondaries investor Banner Ridge Partners.

• OpenGate Capital acquired Player One Amusement Group, a provider of interactive entertainment experiences, from Cineplex for $155 million.

• EQT is considering an IPO for Galderma, Nestle’s former dermatology business, with valuation expectations of around $20 billion, per the FT.

• RA Capital Management is leading a $200 million PIPE financing for Tyra Biosciences.

Tech, Vertical SaaS, & Misc. Enterprise

• ProducePay, a predictable agricultural marketplace platform to reduce food waste, raised $38 million in Series D funding led by Syngenta Group Ventures, with participation from Commonfund, Highgate Private Equity, G2 Venture Partners, Anterra Capital, Astanor Ventures, Endeavor8, Avenue Venture Opportunities, Avenue Sustainable Solutions, and Red Bear Angels.

• Jua, a provider of AI-enabled weather predictions, raised $16 million in seed funding. 468 Capital and the Green Generation Fund co-led, with participation from Promus Ventures, Kadmos Capital, Flix Mobility founders, Session.vc, Virtus Resources Partners, Notion.vc, and InnoSuisse.

• Reken, an AI cybersecurity startup, raised $10 million in seed funding led by Greycroft and FPV Ventures, with participation from Firebolt Ventures, Fika Ventures, Omega Venture Partners, JAZZ Venture Partners, and Homebrew.

• Edrone, a developer of CRM and marketing automation systems for ecommerce, raised $5 million in new funding led by INventures, with participation from Mueller Medien, Atmos, and PortfoLion.

Fintech

• Oobit, a developer of a multi-asset cryptocurrency wallet and payment app, raised $25 million in Series A funding led by Tether, with participation from CMCC Global’s Titan Fund, 468 Capital, and Solana co-founder Anatoly Yakovenko.

Consumer & Media

• Eggspace Entertainment, a game development studio focused on mixed reality titles, raised $4.25 million in seed funding from Transcend Fund, and The Venture Reality Fund.

Healthcare & Life Sciences

• Avation Medical, a developer of wearable neuromodulation for urinary disorders, raised $22 million in Series C funding co-led by ShangBay Capital and Asahi Kasei, with participation from Angelini Ventures, JobsOhio Growth Capital Fund, and existing backers Arboretum Ventures, Tonkawa, Medtronic, and Avestria Ventures.

Industrials, Greentech, & Other

• Interlune, a lunar natural resources startup, raised $15.5 million in new funding.

• Town Lane is targeting $1 billion for its debut real estate-focused fund, per the WSJ.

• Wonder Ventures raised just over $100 million across a pair of early-stage funds.

• One Equity Partners launched fundraising for its ninth buyout fund.

1. Inside the business of credit card rewards.

• Why banks and airlines love rewards cards so much. — Bloomberg

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