JLL – Patheon / DSM Merger Closes

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 USD 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 umatched 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 USD 2.65 billion transaction are as follows:

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


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.