26 Jan Gala Biotech among companies sold for $3.3 billion
Madison, Wis. – In a transaction that could lead to a local expansion, Cardinal Health has reached a definitive agreement to sell its pharmaceutical technologies and services (PTS) segment, including the Middleton-based Gala Biotech, to the Blackstone Group for $3.3 billion in cash.
Cardinal Health, a Dublin, Ohio-based provider of products for the healthcare industry, has owned Gala Biotech since 2002. The transaction is not expected to immediately impact Gala in terms of workforce size or mission, according to President Paul Weiss.
Weiss, however, is hoping that Blackstone will move quickly to expand Gala Biotech’s facilities and production capacity. In announcing the deal, which is expected to close this spring, Blackstone executives pledged to work with their new acquisitions to strengthen their product offerings and accelerate growth and profitability.
“We had been working with Cardinal Health to secure financing to expand our capability in Middleton,” Weiss said. “It needed more focus than Cardinal Health could give it.”
Cardinal Health, an $81 billion company, announced in late 2006 that it planned to divest the PTS segment to focus on healthcare provider customers like hospitals and pharmacies. Cardinal’s pharmaceutical technologies and services units, which employ 10,000 people in 30 locations, generate a combined $1.8 billion in annual revenue.
About 50 of these workers are employed at Gala Biotech.
Gala Biotech’s new owner would appear to have ample capital to finance an expansion. The Blackstone Group, a private investment and advisory firm, has raised approximately $75 billion for alternative asset investing since its formation in 1985. Of that total, more than $30 billion has been devoted to private equity investing.
Blackstone also occupies several positions in the pharmaceutical technologies and services market, including contract manufacturing, drug development, and packaging and printing services.
Gala Biotech is considered a synergistic fit because of its GPEx gene insertion technology. Gala uses the technology to manufacture cell lines, and then uses the cell lines to produce recombinant proteins for clinical and pre-clinical uses.
Given the timetable for closing the deal, Weiss is looking for a decision on expansion by early summer. “We would like to double or triple the capacity of our facility,” he said.
Gala Biotech actually has two locations in Middleton – its own and the former site of Third Wave Technologies – and a facility near Raleigh, N.C.
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