Catalent acquired by Novo Holdings / Novo Nordisk: fairness opinion by Citi
Deal terms
Implied value per share by method vs. $63.50 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Citi to the target board
Discounted cash flow assumptions
Present values calculated as of September 30, 2023; stock-based compensation treated as a cash expense and the potential net present value of Catalent's tax attributes taken into account.
Selected public companies (5)
Charles River Laboratories International, Inc. · ICON public limited company · Lonza Group AG · Siegfried Holding AG · Thermo Fisher Scientific Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / CY2024E Adjusted EBITDA | 12.7x | 14.0x | 22.7x | 12.7x–22.7x | $32.70–$78.35 |
Selected precedent transactions (8)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-09 | Vectura Group plc | PMI Global Services Inc. | — |
| 2021-05 | UDG Healthcare plc | Clayton, Dubilier & Rice, LLC | — |
| 2020-12 | Recipharm AB (publ) | EQT AB | — |
| 2019-08 | Cambrex Corporation | Permira Advisors LLC | — |
| 2017-09 | Cook Pharmica LLC | Catalent, Inc. | — |
| 2017-06 | Albany Molecular Research, Inc. | The Carlyle Group Inc. / GTCR LLC | — |
| 2017-05 | Patheon N.V. | Thermo Fisher Scientific Inc. | — |
| 2016-12 | Capsugel S.A. | Lonza Group AG | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| TV / LTM Adjusted EBITDA (applied to Catalent FY2024E adjusted EBITDA) | 13.8x | 16.6x | 17.4x | 13.8x–17.4x | $27.90–$42.05 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| 52-week historical intraday trading range (informational) | Historical intraday prices of Common Stock during the 52-week period ended February 2, 2024. | $31.45–$74.49 |
| Wall Street analyst price targets (informational) | Publicly available Wall Street research analysts' one-year forward price targets discounted to February 2, 2024 using a discount rate of 11.4%. | $36.75–$53.30 |
| Premiums paid analysis - unaffected closing price (informational) | Premiums paid in selected all-cash M&A transactions with implied transaction values greater than $10 billion announced January 1, 2014 through February 2, 2024 involving publicly traded U.S. targets; a 20%-40% premium range applied to the February 2, 2024 closing price of $54.41 per Share. | $65.40–$76.30 |
| Premiums paid analysis - 60-day VWAP (informational) | Same 20%-40% premium range applied to the 60-day VWAP of Common Stock through February 2, 2024 of $43.06 per Share. | $51.65–$60.30 |
Aggregate fee currently estimated at approximately $63 million; $5 million payable upon delivery of the opinion and approximately $58 million contingent upon consummation. Citi may also be entitled to an additional discretionary fee of up to $10 million. Citi received approximately $2.5 million in fees from Novo Nordisk for lending/debt services in the prior two years.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $4.6B | $4.9B | $5.3B | $5.7B | 7.6% |
| Revenue growth | 4.4% | 6.4% | 8.8% | 7.8% | |
| EBITDA | $947M | $1.1B | $1.2B | $1.4B | 13.8% |
| EBITDA growth | 31.5% | 12.9% | 15.2% | 13.1% | |
| EBITDA margin | 21% | 22% | 23% | 24% | |
| Implied EV / EBITDA | 17.4x | 15.4x | 13.4x | 11.8x |
Year-1 growth is against LTM at announcement ($4.4B revenue, $720M EBITDA); later years are year over year.
Catalent management prepared two sets of unaudited forecasts for fiscal years 2024-2028: the Base Case Projections (standalone, prepared September 2023) and the Novo Case Projections (illustrative upside reflecting a strategic acquisition, prepared early November 2023). Base Case: revenue of $4,400 million in FY2024E growing to $5,726 million in FY2028E, with adjusted EBITDA of $720 million rising to $1,394 million and unlevered free cash flow of $443 million in FY2024E to $262 million in FY2028E. Novo Case: revenue of $4,450 million in FY2024E to $6,757 million in FY2028E and adjusted EBITDA of $750 million to $1,750 million. The Catalent Board focused on the Base Case Projections and directed Citi to rely solely on them.
Process notes
Other Pharmaceutical Services fairness opinions
- Avid Bioservices / GHO Capital Partners / Ampersand Capital Partners 2024
- Societal CDMO / CoreRx 2024 · 11.4x EV/EBITDA
- Syneos Health / Elliott Investment Management / Patient Square Capital / Veritas Capital 2023 · 9.7x EV/EBITDA
- PPD / Thermo Fisher Scientific 2021 · 20.3x EV/EBITDA
- PRA Health Sciences / ICON 2021 · 19.2x EV/EBITDA
- Cambrex / Permira Funds 2019 · 14.5x EV/EBITDA