W. R. Grace & Co. (Columbia, Md.) announced that it has entered into a definitive agreement to acquire the Fine Chemistry Services business (FCS) of Albemarle Corp. (Charlotte, N.C.) for approximately $570 million, including $300 million paid in cash at closing and $270 million funded through the issuance to Albemarle of non-participating preferred equity of a newly created Grace subsidiary.
The acquisition significantly strengthens and expands Grace’s existing pharma portfolio. Pharma & Consumer is the largest, fastest growing and most profitable subsegment within Grace’s Materials Technologies business. FCS adds a comprehensive portfolio of high-value products and services with highly complementary analytical, regulatory and manufacturing capabilities to Grace’s existing pharma portfolio focused on chromatographic resins, formulation excipients and drug delivery, and pharmaceutical intermediates and active pharmaceutical ingredients (APIs).
“This acquisition is strategically and financially compelling and aligns perfectly with our strategy of building a higher growth portfolio by extending our existing capabilities into higher-growth, high-value end markets,” said Hudson La Force, Grace’s President and Chief Executive Officer. “Combining these businesses strengthens our innovation and manufacturing capabilities and gives us scale that will further strengthen our customer value proposition and drive meaningful financial results for our shareholders. FCS’ impressive talent, customer-focused culture, track record of innovation and commitment to operating excellence align well with the Grace Value Model. We look forward to working with our customers to deliver high-value solutions that span every stage of their development cycle.”
Like Grace, FCS is highly focused on differentiated technology, customer-driven innovation, quality and regulatory leadership. The business has a strong, proven capability to deliver customer-focused solutions supporting the entire small-molecule development cycle from the pre-GMP clinical stage through cGMP commercial manufacturing. With this investment, Grace will have a more comprehensive and differentiated offering from early development through commercialization with full analytical, regulatory and manufacturing capabilities. Following the acquisition, Grace will be better positioned to address customers’ broad needs as a fully-integrated development and manufacturing solutions provider.
FCS’ end markets have sustainable, attractive growth rates and margins. Key growth drivers for these end markets include an aging population, favorable global socioeconomic demographics, growing access to health care, and increasing disease treatment demands, among others. The business extends Grace’s presence into high growth areas such as oncology, diabetes, cardiovascular and antivirals.
FCS benefits from extensive and long-term customer relationships, supported by expertise in product development and manufacturing that enables customers to develop targeted solutions for patients. The business has more than three decades of active relationships with 70 of the top 100 pharmaceutical companies as well as development and commercial relationships with more than 300 pharmaceutical companies. Following the close, Grace will serve nine of the top ten pharmaceutical companies.
The transaction is expected to close in the second quarter of 2021, subject to customary closing conditions, including receipt of certain regulatory approval