Pfizer offloads Capsugel to KKR for $2.4 billion

April 4, 2011 By MassDevice staff Leave a Comment

Pfizer Inc. (NYSE:PFE) is selling off its Capsugel unit to private equity firm Kohlberg Kravis Roberts & Co. L.P. (NYSE:KKR) in a $2.38 billion cash deal, the companies said today.

Peapack, N.J.-based Capsugel manufactures hard capsules and drug delivery systems for the pharmaceutical and nutrition industries and generated about $750 million in revenue last year, according to Pfizer. Its divestiture comes on the heals of the company’s $3.6 billion takeover of painkiller maker King Pharmaceuticals Inc. in November.

The world’s largest drug maker expects to fund stock repurchases with the proceeds from the divestiture in 2011 and also said it plans to “identify and invest in other opportunities to maximize its value, including business development.”

Pfizer had already announced plans to buy back $5 billion in shares this year. The company updated its 2011 revenue guidance range from $66.0 billion to $68.0 billion to $65.2 billion to $67.2 billion and pulled back its 2012 revenue targets from $63.0 billion $65.5 billion to $62.2 billion to $64.7 billion.

PFE shares were up about 0.6 percent in mid-day trading and are currently going for about $20.49 apiece.

News of the divestiture overshadowed a “Refusal to File” letter from the FDA for Pfizer’s new drug application for tafamidis, its experimental treatment for Transthyretin Familial Amyloid Polyneuropathy, an incurable neuro-degenerative disease. The FDA found that the application was not sufficiently complete to permit a substantive review, according to the company.

New York-based KKR’s investments in the health-care industry include publicly traded hospital chain HCA Holdings Inc. and orthopedic medical device manufacturer Biomet Inc.

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