Catalent Acquires Paragon Bioservices, Inc. for $1.2 Billion

On May 20, 2019

Somerset-based Catalent, Inc., a global provider of advanced delivery technologies and development solutions for drugs, biologics and consumer health products, has completed the $1.2 billion acquisition of Paragon Bioservices, Inc., a viral vector development and manufacturing partner for gene therapies.

With the addition of Paragon’s specialized expertise in adeno-associated virus (AAV) vectors, the most commonly used vector to deliver DNA to cells, Catalent is positioned to capitalize on strong industry tailwinds in the potentially $40 billion 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, state-of-the-art commercial manufacturing center near the Baltimore-Washington International (BWI) 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, $950 million of incremental term loans and a $350 million 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 $650 million of a new series of convertible preferred stock to funds affiliated with Leonard Green & Partners, L.P. Effective as of the closing of the acquisition, Peter Zippelius, a partner at Leonard Green & Partners, joined Catalent’s board of directors.

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