Catalent said on Monday it would buy privately held gene therapy-focused Paragon Bioservices in an all-cash deal for $ 1.2 billion, helping the drug developer expand its capabilities to make specialized and costly treatments.
Paragon, backed by private-equity firms Camden Partners and NewSpring Capital, focuses on developing and manufacturing products such as complex biopharmaceuticals for its clients.
Catalent also develops drugs for other companies and does business in Asia, Europe, and North and South America.
The deal follows other multi-billion dollar deals as drug companies have been aggressively moving into the potentially $ 40 billion addressable market for gene therapy, where treatments for rare, genetic diseases command some of the highest prices.
In Februray, Swiss drugmaker Roche agreed to buy U.S.-based gene therapy specialist Spark Therapeutics for $ 4.3 billion, while Novartis purchased U.S.-based Avexis for $ 8.7 billion last year.
Catalent expects the transaction to add to its adjusted earnings in the second full fiscal year after closing.
The company said it will fund the deal with proceeds from a $ 650 million incremental term loan and issuance of $ 650 million of a new series of convertible preferred stock.
After the deal closes, Paragon will be led by its Chief Executive Officer Pete Buzy.
The Wall Street Journal reported on Sunday that Catalent had agreed to buy Paragon.