Lonza has been in the process of separating LSI into a standalone unit since 2019.
Jeremy Moeller/Getty Images
Basel-based Lonza AG is moving to sell its Lonza Specialty Ingredients (LSI) division to private equity firms Bain Capital and Cinven for CHF 4.2 billion ($4.7 billion), completing a planned pivot to focus on its Lonza Pharma, Biotech & Nutrition business.
In its year-end financials last month, Lonza reported sales of CHF 4.5 billion ($5 billion) and sales growth of 12.0%, largely on the back of its health care group.
Lonza has been in the process of separating LSI into a standalone unit since 2019. Sales had slumped relative to its pharmaceutical business, and the company brought in Roche and Novartis veteran Pierre-Alain Ruffieux as CEO in November to steer the business in this new direction.
Last month, the company said it had selected a shortlist of bidders for LSI, which at one time reportedly included Advent International, Carlyle Group Inc., Lanxess AG, Lone Star Funds, Partners Group Holding AG and Petronas.
Lonza’s life sciences business includes a partnership with Moderna to manufacture its COVID-19 vaccine, in facilities at Portsmouth, New Hampshire, and in Switzerland.
LSI, which employs about 2,800 people at its 17 manufacturing and 11 research and development sites globally, specializes in microbial control solutions like disinfectants, preservatives and sanitizers. It also produces industrial chemicals and, at its Switzerland facility, more specialized chemicals, for the electronics, aerospace, food and agrochemical industries.
Last year, LSI’s head Sven Abend, then Lonza’s chief operating officer, left to become CEO of collagen protein supplier Gelita.
Both private equity firms have experience with specialty chemicals companies. Late last year, Cinven-backed life sciences ingredients company Barentz International which announced last year it would acquire Maroon Group, which manufactures specialty chemicals and life science ingredients. And in 2018, Bain acquired specialty chemical additive manufacturer Italmatch Chemicals.
David Danon, Managing Director at Bain Capital, called LSI the “leading global player in the growing market for microbial control.” In a statement, the firms said LSI’s market position was beneficial due to “favorable penetration trends, supportive regulatory dynamics, and the growing need to protect society from harmful microorganisms.”
Danon added that the firms will “use LSI as a platform for further industry consolidation, in line with Bain Capital’s and Cinven’s strategies in other sectors.” This could include buy-and-build opportunities throughout the sector.
If approved, the sale is expected to close in the second half of 2021.
