Press release

Royal DSM and JLL Partners Create DPx

Heerlen, NL, 11 Mar 2014 19:00 CET

$2.65 billion transaction to create global CDMO leader successfully completed

JLL Partners (JLL), the middle-market private equity firm, and Royal DSM (Euronext: DSM KON), the global Life Sciences and Materials Sciences company, today announced the successful closing of the transaction announced in November 2013 combining DSM Pharmaceutical Products (DPP) and Patheon Inc. into a new privately held company, named DPx Holdings B.V. (DPx). As of today, DPx, a leading global contract development and manufacturing organization (CDMO) for the pharmaceutical industry with anticipated sales of around $2 billion (pro-forma), a strong EBITDA and operational cash flow and more than 8,000 employees, will become operational.

DPx is 51% owned by JLL and 49% by Royal DSM. With headquarters in Durham, N.C., DPX’s global footprint includes 24 global locations across North America, Europe, Latin America and Australia. The company is led by DPx CEO, Jim Mullen, former CEO of Patheon, and will be run as an independent standalone company. DPx is the parent company name and includes the business units Patheon, DSM Fine Chemicals and Banner Life Sciences.

DPx provides a unique breadth of offerings from finished dosage (drug products) to active substances (APIs) with a wide range of technologies and offers comprehensive end-to-end solutions to a broad spectrum of companies ranging from large pharmaceutical and biotech companies to specialty pharma companies, generics and emerging pharma companies. It is a leader in proprietary softgel formulations for over-the-counter, prescription and nutritional consumer products through the Banner Life Sciences business.

Stefan Doboczky, Member of the DSM Managing Board and responsible for DSM’s Pharma interests, commented: “I am proud to witness the formation of DPx, a global top CDMO organization which will create substantial value for all stakeholders. With this partnership DSM made another major step implementing our strategy for our Pharma activities, growing via partnerships. Our customers will greatly benefit from DPx’s unmatched depth and breadth of capabilities and services. I am convinced that this exciting new venture will be ideally positioned to help customers succeed with their unique needs.”

Paul S. Levy, Managing Director of JLL Partners, shared: “I am delighted that we have been able to combine Patheon with the pharmaceutical assets of DSM. This transaction is truly accretive with fundamental business logic. With DSM, JLL Partners has now created a global leading pharmaceutical contract manufacturer with the broadest product offering for our many and diverse customers. Our management team, representing the best talent from each company, is proven and completely committed to this enterprise. JLL is proud to have been chosen by DSM, a major Dutch multinational with a storied past, as a partner, and we look forward to rapidly integrating the two businesses and building aggressively thereafter.”

“Starting today, we are better positioned to add scale, new value chain capabilities and technologies, as well as expand our end-to-end service offerings to our customers,” said Jim Mullen, CEO of DPx. “We will lead the way in changing how services are purchased by our customers and in doing so we will create great value for our customers and enhance our leadership position. This key strategic principle will drive future growth and position us as the global leader in the CDMO industry, with offerings unmatched by our competitors.”

The highlights of the now completed $2.65 billion transaction are as follows:

  • DPx is owned by JLL (51%) and DSM (49%)
  • JLL contributed $500 million in equity to DPx and DSM contributed DSM Pharmaceutical Products (DPP) and received approximately $115 million in cash and $75 million of Preferred Partnerships Interest, thereby valuing DPP at $670 million
  • DPx effected a Plan of Arrangement pursuant to the Canada Business Corporations Act (“POA”) with Patheon under which DPx acquired Patheon for $9.32 per share in cash resulting in a total enterprise value for Patheon of approximately $1.98 billion (about €1.43 billion)
  • DPx is well positioned to achieve integration, synergy and operational efficiency goals

DSM financial information

DSM expects the transaction to be accretive to its earnings per share from 2015 onwards. DSM will present the investment in DPx as an associated account in accordance with the equity method. Under IFRS rules also DSM Sinochem Pharmaceuticals was deconsolidated from 1 January 2014. Consequently, the reporting of the Pharma cluster in the core EBITDA of DSM has been discontinued from the beginning of 2014.

About DPx

DPx is the privately held parent company of the Patheon, Banner Life Sciences, and DSM Fine Chemicals businesses. The company is a leading provider of CDMO services, pharmaceutical products and products for other industries. Founded in 2014 as a result of a deal between JLL Partners and Royal DSM, DPx has three core business units, comprised of Patheon Pharma Services, DSM Fine Chemicals and Banner Life Sciences. With global headquarters in Durham, N.C., DPx has a footprint of 24 locations across North America, Europe, Latin America and Australia with more than 8,000 employees. DPx offers customers unsurpassed quality, integrated offerings and value through these three core business units.

About JLL Partners

JLL Partners is a middle-market private equity firm with a 25 year track-record of adding value to complex investments through financial and operational expertise. Since its founding in 1988 by Paul S. Levy, JLL Partners has committed approximately $4.2 billion across six funds, and developed significant expertise in the healthcare and other sectors. JLL is a control investor and sources its deals from its deep network of industry contacts, applying its proven, value-oriented and growth driven investment approach to provide limited partners with attractive risk-adjusted returns throughout all investment cycles.

For more information

Lieke de Jong-Tops

Senior Communications Manager
+31 45 578 2420
media.contacts@dsm.com

Dave Huizing

Vice President Investor Relations
+31 45 578 2864
investor.relations@dsm.com

Media Relations

+31 45 578 2420

Investor Relations

+31 45 578 2864