Patheon will acquire Banner Pharmacaps from VION N.V. for $255 million, subject to working capital and other adjustments. Banner is one of the largest providers of softgel formulations for OTC, prescription and nutritional consumer products and is headquartered in High Point, NC, with additional research labs and manufacturing facilities in the Netherlands, Canada and Mexico. The acquisition is expected to close by the end of the year.

James C. Mullen, Patheon’s chief executive officer, said, “The acquisition of Banner advances our strategic plan put in place in 2011, fully aligning with Patheon’s intent to be the leader in oral dosage development and manufacturing services. The transaction provides us with a well-balanced portfolio of proprietary products, state-of-the-art facilities with enhanced capabilities, as well as an expanded geographical presence. We believe our visibility within the industry will be further strengthened as we pass the $1 billion-revenue mark.” Banner posted sales of approximately $250 million in the previous year, with a purchase price around 10x EBITDA.

Peter Beckers, chairman of Banner Pharmacaps, and executive board member at VION, remarked, “It allows VION to focus on its core business of food and ingredients, while aligning Banner with a global company that is known for its focus on quality and customer service in the pharmaceutical industry. We are convinced that this transaction represents the best outcome for Banner’s customers, partners and for our people, who will benefit from the scale opportunities of being a part of an organization such as Patheon.”

Mr. Mullen told Contract Pharma that the acquisition process was “a quick six weeks,” as VION began the sale process late last summer. He added that Banner’s business does not overlap with Patheon’s recent PGels offerings, in which the company has partnered with Procaps unit Softigel to provide softgel scientific and formulation expertise.

“We see some interesting possibilities in the OTC space,” Mr. Mullen told Contract Pharma. “Banner has a number of interesting customers. They also provide some contract research services, which falls into our PDS business; it’s another technical solution for us to offer customers.”

He also pointed out the significance of Banner’s work in Paragraph IV filings, noting that the acquisition adds a number of ANDA filings to Patheon’s portfolio. “We’re not iontending to create a generics company, but holding ANDA registrations for products and working through another commercial company puts us in position to capture the economics of those products.” He referred to this segment as a third busines for Patheon.

The acquisition was financed in part by Morgan Stanley, UBS and Credit Suisse. Mr. Mullen remarked, “People see the progress in the transformation that we’ve been executing over 18 months, and they’re wiling to finance that progress. If timing of this had been different, that financial backing may not have come together.”

Patheon chief financial officer Stuart Grant told Contract Pharma, “It’s a good financing package. The credit ratio looks good when you combine the pro forma EBITDA of Patheon and Banner Pharmacaps.”