Lonza to Acquire InterHealth for as Much as $300 Million

  • Nutritional ingredient maker to be bought from Kainos Capital
  • Lonza sees immediate boost to earnings from acquisition

Lonza Group AG agreed to buy InterHealth Nutraceuticals for as much as $300 million, a sign the Swiss chemical maker may be back on the hunt for major acquisitions after a break of almost five years.

The purchase of the nutritional ingredients company from private equity firm Kainos Capital is expected to give an immediate boost to earnings, Basel-based Lonza said in a statement on Monday. The drug-ingredient maker is paying about 10 times InterHealth’s earnings before interest, taxes, depreciation and amortization, it said.

Chief Executive Officer Richard Ridinger is opening the purse strings to pursue deals after years of reorganization following the 2011 purchase of Arch Chemicals Inc. for $1.35 billion. Lonza raised its profit guidance for 2016 last month, an indication the company now has the financial power to attempt larger transactions.

“With this acquisition Lonza is taking a further step along our strategic path as a high-value supplier” to the health-care industry, Ridinger said in the release.

Lonza has produced vitamin B3 and food emulsifiers for more than 40 years and its current nutrition portfolio includes brands such as Carnipure, a supplement for energy metabolism, and ResistAid for the immune system.

InterHealth will have limited overlap with Lonza’s existing ingredients business, although the purchase will be able to generate cost savings in product distribution, Vontobel analyst Carla Baenziger said in a note.

Margins

Lonza expects the acquisition to be “highly accretive on profitability margins,” it said by email. As well as ingredients for joint-health for humans, InterHealth’s technology is also applicable to the pet-health market as a “nice add on,” Lonza said.

The transaction is expected to close in September and Lonza will finance the deal with existing credit lines.

The Swiss company’s shares were little changed at 188.5 francs as of 4:56 p.m. in Zurich.

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