£148m acquisition for listed chemicals business

East Yorkshire-based speciality chemical business Croda International has agreed to acquire Avanti Polar Lipids Inc, a specialist in lipid-based drug delivery technologies for next generation pharmaceuticals.

Croda has acquired Avanti for an initial consideration of $185m (£148m) on a debt and cash-free basis, with an additional earnout of up to $75m (£60m) based on near-term commercial opportunities using Avanti’s lipid-based solutions.

Avanti, founded in 1967 by Dr Walter and Rowena Shaw, operates globally from one site in Alabama in North America.

Of its 150 employees, more than 100 are in scientific roles. The company boasts an extensive IP portfolio, with the launch of 125 innovative products typically each year.

Avanti creates and makes high-purity polar lipids, that are increasingly being used as delivery systems for complex therapeutic drugs and in next-generation mRNA vaccines.

These lipid technologies ensure the targeted, controlled and extended release of active pharmaceutical ingredients (APIs), increasing their efficacy and safety.

The business provides its products and services to most leading pharmaceutical companies, as well as to thousands of biotechnology businesses and academic research organisations.

Croda says Avanti’s know-how and technology are highly complementary to its own capabilities. And it says the acquisition will more than double its research and development capability in drug delivery.

Avanti will also provide a new channel to market Croda’s ingredients for early-stage pharmaceutical research in both commercial and academic organisations worldwide.

The acquisition is subject to customary US regulatory approvals. On completion, Avanti will continue to operate under its existing brand, led by the current management team.

It will become a part of Croda’s Life Sciences sector and sit within the growing Health Care business. The acquisition is being financed by a three-year term loan, maintaining Croda’s strong liquidity.

Steve Foots, chief executive officer of Croda, said: “We have long admired the Avanti team for their deep scientific know-how and are already working together on high-potential commercial opportunities.

“With their exciting drug delivery technologies, Avanti is a market leader in a high growth niche of the health care market, serving over 3,000 customers globally.

“Bringing Avanti’s best-in-class expertise into Croda also significantly enhances our presence across the pharma product lifecycle, including early stage R&D, clinical trials, analysis and formulation.

“I am confident Avanti will prove transformative to the capabilities and performance of our Life Sciences sector.”

Walter Shaw, chief executive officer of Avanti, said: “Together with Croda, we are delighted to have found the right home for Avanti, which has been a lifetime’s work for my wife, myself and many of the team.

“This transaction comes at an exciting moment in the development and proven need for our proprietary lipid systems, and Croda’s skills and Avanti’s capabilities are a powerful match.

“I am convinced that Croda, with its focus on innovation, is the best place for Avanti to realise its global potential.”

BlackArch Partners served as the exclusive financial advisor to Avanti Polar Lipids, Inc.