Pfizer sells world’s biggest hard capsules biz for $ 2.38 b

Reuters: Pfizer Inc said it struck a deal to sell its Capsugel unit, the world’s largest maker of hard capsules, to private equity firm KKR & Co for nearly $2.38 billion.

Pfizer, which said in October it was exploring the sale of Capsugel, said it expects to make additional share repurchases this year as a result of the deal, beyond its previous plans for $5 billion in buybacks for 2011.

The deal with KKR comes as the world’s largest drugmaker has indicated it is reviewing possible further divestitures under Ian Read, its new chief executive officer. Pfizer’s initial decision to explore options for Capsugel came a few months before Read was named CEO.

“They’re looking at ways to make the company smaller,” said Jon LeCroy, an analyst with Hapoalim Securities. “The key for any company obviously is getting back to growth, and Pfizer is so big, it’s almost impossible for them to do that.”

Pfizer faces the loss later this year of exclusive rights to its huge-selling Lipitor cholesterol drug, which stands to hurt the company’s sales and profits.

Capsugel had about $750 million in revenue last year and manufactured more than 180 billion hard capsules.  In addition to hard gelatin capsules, Capsugel’s business includes liquid, softgel, non-animal and fish gelatin capsules, for use in pharmaceutical products and dietary supplements.

Capsugel, whose global headquarters will remain in New Jersey, was created in the early 1960s by drugmaker Parke-Davis, which was part of Warner-Lambert when Pfizer acquired it in 2000 in a blockbuster deal.

Its customers have included Pfizer as well as outside companies in the pharmaceutical, consumer medicine and health and nutrition industries.