Drug manufacturer Patheon plans major IPO to pay down debt
- Dutch contract drug manufacturer Patheon N.V. is planning an initial public offering aimed at raising over $580 million to pay down debt, the company said Monday.
- Patheon expects to list 30.5 million ordinary shares on the New York Stock Exchange for an expected IPO price of between $19 and $22 a share.
- A major player in the contract pharma space, Patheon has seen its revenues grow to $1.7 billion in fiscal year 2014, up from just under $700 million in fiscal year 2011.
During the last five years, Patheon built out its capabilities through a series of mergers and acquisitions. Under the leadership of CEO James Mullen, Patheon acquired Banner Pharmacaps in 2011 for $255 million, followed the purchase of Gallus Biopharmaceuticals for an undisclosed amount in 2014.
That same year, Patheon (organized as Patheon, Inc.) became a business unit of Patheon N.V, the result of a partnership between private equity firm JLL Partners and Royal DSM
Consolidation, along with increased capacity and scalability have helped fuel Patheon's impressive revenue growth, although the company has continued to operate at a loss.
In an announcement of the planned offering, Patheon said it intended to use the proceeds along with some cash on hand to repay the entirety of its $550 million in senior PIK toggle notes.
Although Patheon expects to list 30.5 million shares, about 16% of those shares are being sold by a unnamed "selling stockholder." Patheon won't receive any money from the sale of those roughly 4.9 million shares.
While the company currently expects its stock to list for between $19 and $22 a share, the final price could change.
Even after paying off the PIK notes, Patheon would still have substantial indebtedness. Total debt was $1.95 billion as of January 31, 2015, according to a filing with the Securities and Exchange Commission.
If the offering proceeds as planned, the stock will trade under the ticker "PTHN" on the New York Stock Exchange. J.P. Morgan, Morgan Stanley, Jefferies, and UBS Investment Bank are the lead book-runners for the IPO.
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