The healthcare M&A industry witnessed a significant tremor today with the announcement that Novo Holdings, the investment arm of the Novo Nordisk Foundation and controlling owner of pharmaceutical giant Novo Nordisk, is acquiring global CDMO Catalent for $16.5 billion. After Novo Holdings acquires Catalent, it will sell three Catalent manufacturing sites to Novo Nordisk for $11 billion. Those facilities make Novo Nordisk’s GLP-1 drugs for metabolic conditions (e.g. Wegovy), among other products, and will help ensure that future demand for Novo's breakthrough product is met. The deal is for $63.50/share, a 45%-50% premium to where Catalent traded a month ago, but well below the highs of $140/share from November 2021.
CDMO EBITDA Multiples
Catalent's guidance for FY 2024 (June 30 YE) is for revenue within the range of $4.3b to $4.5b and EBITDA within the range of $680 million to $760 million. Using the mid-points, the deal works out to 3.8x revenue and 22.9x EBITDA; with the EBITDA multiple representing one of the largest multiples for a CDMO in our database. However, Catalent's revenue and EBITDA has declined from $4.8b and $1.1b in FY 2022 due to plant shutdowns and other operational issues. Using FY 2022 figures implies a more typical 15x EBITDA.
Pharmaceutical Services M&A Deal Volumes
The deal comes amid declining CDMO M&A announcements despite strong growth trends for the pharmaceutical services industry as a whole, primarily driven by increasing CRO and pharma consulting firm deal announcements.
About Scope Research
The Scope Research Healthcare M&A Valuation Database currently has financial details for 136 pharmaceutical services (CRO, CDMO, consulting, and transportation) deals going back to 2010, 112 of which include reported EBITDA multiples. The pharma services data can be purchased individually, while our affordable annual subscriptions provide access to all of our healthcare M&A databases and segments, updated continuously.
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