Pfizer announced today that it is selling its Capsugel - capsule making and drug delivery unit - to the private equity house Kohlberg Kravis Roberts (KKR) & Co for $2.38 billion. That is equivalent to about 3.2x sales as the Capsugel unit had revenues of $750 M last year on sales of 180 billion hard capsules. It is the largest capsule making business in the world.
The deal comes on the heels of Pfizer CEO's statements last month that Pfizer would be looking at selling off its non-pharma units - specifically mentioning capsules, nutrionals, consumer and animal health. Pfizer may also look to sell its Established Products unit with $10 billion in off-patent drug sales.
Pfizer says it will take the money from the capsule unit sales to buy back more stock -- over and above the $5 billion buy-back that it has already announced. It will also look for investing for "other opportunities to maximize" shareholder value, i.e. keep the shareholders at bay. Pfizer stock has increased more than 25% since former CEO Jeff Kindler's resignation in December.
Pfizer also took this opportunity to announce a lowering in its revenue expectations in the next couple years due to the capsule unit sale. Revised revenue estimates for 2011 are $65.2 to $67.2 billion -- down from $66 to $68 billion. Estimates for 2012 were lowered to $62.2 to $64.7 billion down from the previous $63 to $65.5 billion.
As far as future plans, analysts and market watchers are specualting that the nutritionals unit may be next on the block -- as it is fast growing and its spin-off offers Pfizer tax and dividend advantages.
Posted by Bruce Lehr April 5th 2011.