Cambrex to buy SK Capital-owned Halo Pharma for $425 mln

Cambrex Corp (NYSE: CBM) has agreed to acquire Halo Pharma, a dosage form contract development and manufacturing organization (CDMO).

Cambrex agreed to buy Whippany, New Jersey- and Montréal-based Halo for about US$425 million. The deal is expected to close in Q3 2018.

The seller is U.S. private equity firm SK Capital Partners, which made a control investment in Halo in 2015.

Cambrex, an East Rutherford, New Jersey-based provider of products and services for the development and commercialization of small molecule therapeutics, said the deal will allow it to enter the CDMO market.

PRESS RELEASE

Cambrex to Acquire Halo Pharma, Adding Drug Development and Finished Dosage Capabilities to Global API Manufacturing Network

East Rutherford, NJ – July 23, 2018 – Cambrex Corporation (NYSE: CBM), a leading manufacturer of small molecule innovator and generic Active Pharmaceutical Ingredients (APIs), today announced it has entered into a definitive agreement to acquire Halo Pharma (Halo), a leading dosage form Contract Development and Manufacturing Organization (CDMO), majority owned by funds managed by the private investment firm SK Capital Partners, for approximately $425 million. With the acquisition of Halo, Cambrex will enter the large and growing finished dosage form CDMO market. Halo provides drug product development and commercial manufacturing services, specializing in oral solids, liquids, creams, sterile and non-sterile ointments. Halo’s core competencies include developing and manufacturing highly complex and difficult to produce formulations, products for pediatric indications and controlled substances. Cambrex’s acquisition of Halo creates a leading small molecule CDMO with a broad range of capabilities and a robust customer base.

“We are excited to announce our acquisition of Halo, which underscores our commitment to providing comprehensive, best-in-class services to address the needs of our global pharmaceutical, biotech and generic customers,” commented Steve Klosk, President and CEO of Cambrex. “This acquisition opens a completely new segment of the market for Cambrex in finished dose development and manufacturing. Halo’s expertise in oral solids, liquids, creams and ointments fits well with our small molecule API business and brings a substantial new customer base and pipeline of small molecule products. We believe the combination of Cambrex and Halo will attract new customers to the combined company and allow us to more efficiently broaden our pipeline of products, while continuing to capitalize on the rapidly-growing pharmaceutical services market.”

“This transaction affirms the reputation we have developed as a trusted CDMO with a strong track record of regulatory compliance and quality, technical expertise and growth,” commented Lee Karras, CEO of Halo Pharma. “We are very excited to be joining the Cambrex team and look forward to growing the combined company together and providing our customers the expansion of services this creates.”

Commenting on the agreement, Aaron Davenport, Chairman of Halo Pharma and Managing Director of SK Capital Partners, said, “We are proud of what has been accomplished by Halo under the leadership of CEO Lee Karras and CFO Barry Lederman and its entire management team. Halo is well positioned to continue to grow and flourish under Cambrex’s ownership, and we are confident they are the right owner to move the business into the next stage of its development. We wish Cambrex and the employees of Halo every success, and are excited to follow their accomplishments in the years to come.”

Halo operates two state-of-the-art, GMP compliant facilities located in Whippany, NJ, USA and Montreal, Québec, Canada, comprising 430,000 square feet of plant space. Both sites have a strong reputation for quality and excellent regulatory track records with regulatory approvals from the US FDA, EMEA, DEA and Health Canada. Halo is currently engaged in more than 100 product development projects for over 70 customers, and is expected to generate over $100 million in annual revenue in 2018. Halo’s 450-person workforce will join Cambrex’s 1,200 employees across the United States and Europe.

Cambrex will acquire Halo for $425 million in total cash consideration. The acquisition will be funded with a combination of cash on hand and borrowings against Cambrex’s $500 million senior credit facility. Upon completion of the transaction, Cambrex’s net leverage ratio, pro forma for the transaction, is expected to be about 1.2x. Cambrex expects the transaction to be accretive in 2019.

Completion of the transaction is subject to customary closing conditions and is expected to occur during the third quarter of 2018.

RBC Capital Markets LLC is acting as exclusive financial advisor to Cambrex and Ropes & Gray LLP and Fasken are serving as legal counsel.

Wells Fargo Securities, LLC is acting as lead financial advisor to Halo, with Mizuho Securities USA, LLC acting as co-advisor. Morgan, Lewis & Bockius LLP is serving as legal counsel to Halo.

Conference Call and Webcast
A conference call to discuss Cambrex’s acquisition of Halo will begin at 8:30 a.m. ET on Monday, July 23, 2018 and can be accessed by calling 1-888-394-8218 for domestic and +1-786-789-4776 for international. Please use the passcode 2382613 and call approximately 10 minutes prior to the start time. A webcast will be available in the Investors section of the Cambrex website located at www.cambrex.com. A telephone replay of the conference call will be available through Monday, July 30, 2018 by calling 1-888-203-1112 for domestic and +1-719-457-0820 for international. Please use the passcode 2382613 to access the replay.

About Cambrex
Cambrex Corporation is an innovative life sciences company that provides products, services and technologies to accelerate the development and commercialization of small molecule therapeutics. The Company offers Active Pharmaceutical Ingredients (APIs), advanced intermediates and enhanced drug delivery products for branded and generic pharmaceuticals. Development and manufacturing capabilities include enzymatic biotransformations, high potency APIs, high energy chemical synthesis, controlled substances and continuous processing. For more information, please visit www.cambrex.com

About Halo Pharma
Halo Pharma is a rapidly growing contract development and manufacturing organization (CDMO) that provides scientific and development expertise as well as a wide spectrum of manufacturing services from its locations in Whippany, New Jersey, USA and Montreal, Québec, Canada. Halo offers fully integrated product development and commercialization capabilities in a variety of dosage forms including tablets, capsules, powders, liquids, creams, sterile and non-sterile ointments and suppositories. Halo Pharma’s capabilities in the areas of tech transfer, process and product development, production, scale-up/validation and analytical method development allow us to partner with clients from development through commercialization or at any point along the way. For more information, please visit www.halopharma.com

About SK Capital Partners
SK Capital Partners is a private investment firm with a disciplined focus on the specialty materials, chemicals and pharmaceuticals sectors. The firm seeks to build strong and growing businesses that create substantial long-term economic value. SK Capital Partners utilizes its industry, operating and investment experience to identify opportunities to transform businesses into higher performing organizations with improved strategic positioning, growth and profitability as well as lower operating risk. For more information, please visit www.skcapitalpartners.com

Contact: Cambrex Corporation
Tom Vadaketh
Executive Vice President & CFO
Tel: +201.804.3033
Email: tom.vadaketh@cambrex.com

Contact: Halo Pharma
Lee Karras
CEO
Tel: +973.428.4348
Email: lkarras@halopharma.com