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Novo Holding’s $16.5bn Acquisition of Catalent

By Ahaan Roychowdhury, Shyam Patra, Dimos Kamposiouras, Krish Raj (UCL) ; Melvin Bergeret, Arthur Delfour, Axel Nkam, Victor Zheng and Clément Melusson (ESCP Business School)

Photo: Roberto Sorin (Unsplash)


Overview of the deal

Acquirer: Novo Holdings

Target: Catalent

Implied Equity Value: $11.5 bn

Total Transaction Size: $16.5 bn

Closed date: 02/05/2024

Target advisor: Citigroup, J.P. Morgan (financial); Jones Day, White & Case, Skadden, Arps, Slate, Meagher & Flom LLP, Cravath, Swaine & Moore, Moalem Weitemeyer Bendtsen (legal)

Acquirer advisor: Evercore Group, Morgan Stanley (financial); Sullivan & Cromwell (legal)

Novo Nordisk, a leading Danish pharmaceutical company, has finalized a deal to purchase three manufacturing facilities for $11 billion. This strategic acquisition is aimed at bolstering the company's production capabilities for its highly successful weight loss drugs, Ozempic and Wegovy, which have propelled Novo Nordisk's valuation to over $500 billion. The deal is part of a larger transaction where Novo Holdings, the entity with majority voting rights in Novo Nordisk, acquired U.S. drug manufacturer Catalent for $16.5 billion. Subsequently, Novo Holdings agreed to sell three of Catalent's manufacturing sites to Novo Nordisk. These sites, located in Indiana, Brussels, and Anagni, Italy, specialize in "fill-finish" operations, crucial for the final stage of drug manufacturing. This acquisition is a response to supply chain challenges that have restricted Novo Nordisk's capacity to meet the soaring demand for its diabetes and anti-obesity medications. While the new facilities will not immediately resolve these constraints, they are expected to significantly enhance Novo Nordisk's production capacity from 2026 onwards, enabling the company to better serve individuals with diabetes and obesity globally

"We are excited to partner with Catalent as it enters a new phase of growth and accelerates its mission to develop, manufacture and supply products that help people live better and healthier lives. With our expertise and track record of investing in high quality life sciences businesses, we believe Catalent is a very good strategic fit. We are excited to support the Company’s stakeholders in the years ahead, especially employees and customers as they work to develop new products to benefit patients. As engaged investors committed to productive relationships with all our partners, we look forward to working with the Catalent team to realise the Company’s full potential. Importantly, our acquisition of Catalent is aligned with our mandate to invest in high quality life sciences companies for the benefit of the Novo Nordisk Foundation’s mission and philanthropic causes" - Kasim Kutay, CEO (Novo Holdings)

Company Details (Acquirer - Novo Holdings A/S)

Novo Holdings A/S is the investment entity of the Novo Nordisk Foundation, a Danish non-profit foundation dedicated to improving public health and supporting scientific research. As a major shareholder in Novo Nordisk and other life science companies, Novo Holdings invests in a wide range of companies from early-stage biotech to established pharmaceutical firms, aiming to generate a financial return to support the foundation's philanthropic activities.

Founded in 1999, headquartered in Copenhagen, Denmark

CEO: Kasim Kutay

Number of employees: 400 at Novo Holdings and over 60,000 at Novo Nordisk

Market Cap: $537bn (as of 20/02/2024) 

EV: $541bn (as of 20/02/2024)

LTM 02/2024 Revenue: $31.2bn

LTM EBITDA: $15.4bn

LTM EV/Revenue: 17.34x


Recent Transactions: Novo Holdings acquired Ellab from EQT Group in June 2023 for €1bn (Ellab offers validation and monitoring solutions for the biotechnology and pharmaceutical industries)

Company Details (Target - Catalent Inc)

Catalent is a leading global company specialising in supporting pharmaceutical, biotech, and consumer health partners throughout the entire product lifecycle. They offer a wide range of services including product development, manufacturing, and supply chain management. With extensive expertise in various fields, Catalent is a preferred partner for personalised medicines, blockbuster drugs, and consumer health products. They boast a large global presence with over 50 manufacturing sites and supply billions of doses of thousands of products annually. Their workforce of over 18,000 includes thousands of scientists and technicians. Catalent, headquartered in Somerset, New Jersey, is a publicly traded company listed on the NYSE and generated nearly $5 billion in revenue in the 2022 fiscal year.


Founded in 1933, headquartered in Somerset, New Jersey

CEO:  Alessandro Maselli

Number of employees: 18,000

Market Cap: $ 10.63 Bn (as of 23/03/2024)

LTM Revenue: $4.1 Bn

LTM EBITDA: $-0.75 Bn


Projections and Assumptions

Short-term consequences

After the announcement of the deal on February 5, 2024, notable shifts occurred in the financial markets. Notably, Novo Nordisk shares experienced a 9.8% increase (as of 19/02), while Catalent's shares rose by 6.66%. This aligns with expectations, as the deal purchase price represents a premium of 16.5% to the closing price of Catalent’s common stock as of February 2, 2024, and a 47.5% premium to the 60-day volume-weighted average price.


Acquiring Catalent, with its extensive global presence (more than 50 global sites) and a skilled workforce of over 3,000 scientists and technicians, is a strategic move for Novo Nordisk. With this acquisition, the Danish multinational is bolstering its manufacturing output, and will increase its ability to meet the growing demand for Wegovy (medication for people living with obesity) and Ozempic (diabetes medicine), which is aligned with the firm’s strategy of reaching more people living with diabetes and obesity with current and future treatments.

Long-term Upsides

The acquisition of Catalent by Novo Nordisk brings several long-term upsides for the Danish drugmaker

Most Notably, the increased Production Capacity. Novo Nordisk's acquisition of three manufacturing sites from Catalent will enhance its production capacity, particularly for its diabetes and anti-obesity drugs like Ozempic and Wegovy. This expansion is crucial given the growing demand for these medications, as evidenced by Novo Nordisk's record sales in 2023.

Diversification and a Strengthened Supply Chain are other long term upsides. By acquiring Catalent's manufacturing sites specialising in "fill-finish" operations, Novo Nordisk diversifies its manufacturing capabilities and strengthens its supply chain. This move can help mitigate supply chain bottlenecks, which have been hindering the company's ability to meet the high demand for its best-selling treatments.

The acquisition comes as a strategic fit with existing operations. Two of the three acquired sites are already contracted by Novo Nordisk for filling its injection pens, indicating a strategic fit with the company's existing operations. This alignment suggests smoother integration and operational synergy between the acquired assets and Novo Nordisk's current manufacturing processes. While the new sites may not immediately resolve supply chain constraints, they are expected to gradually increase filling capacity from 2026 onwards. This positions Novo Nordisk for sustained long-term growth, allowing it to better serve a larger population of patients with diabetes and obesity.

Finally, The acquisition has been well-received by investors, as evidenced by the 4% increase in Novo Nordisk's shares following the announcement. Additionally, Novo Holdings, the controlling shareholder of Novo Nordisk, expects substantial dividends from the company's success with Ozempic and Wegovy, further enhancing shareholder value.

Overall, the acquisition of Catalent by Novo Nordisk represents a strategic move to address production challenges, capitalise on growing market demand, and drive long-term growth and value creation for both companies and their shareholders.

Risks and Uncertainties


Catalent has previously been under scrutiny for some aspects of certain batches failing to meet quality control standards. The US Food and Drug Administration (FDA) concluded the plant had recorded around 194 deviations between Oct 2021 and Oct 31 2023. Catalent's Brussels plant had also repeatedly breached US sterile safety rules in 2021 and 2022 and last year inspectors had spotted a ‘pest’ on the production line. 


Novo’s main rival in the obesity drug market, Eli Lilly has claimed antitrust concerns. Since Catalent is an integral part or a manufacturer of both commercial and pipeline products for the industry especially in diabetes and obesity, Eli Lilly also relies on Catalent for some of its drugs. The deal could potentially raise concerns with the antitrust authorities, however seems unlikely because the drugmaker is only buying three of the roughly 50 sites Catalent operates. 




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