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Lonza (NR, BBB+) uses $1.8b cash on facility

HEALTHCARE
  • Lonza {LONN SW Equity} (NR, BBB+) will acquire a manufacturing facility in the US from Roche {ROG SW Equity} (AA, Aa2, AA) for $1.2b cash.
  • Its guiding to another CHF500m (~$560m) in capex to upgrade the facility, and sees it accretive - its boosted mid-term guidance ('24-'28) from (constant currency) 11-13% CAGR to 12-15%.
  • Other medium-term guidance is left unch; core EBITDA margin of 32-34% in 2028, double digit ROIC in '28, capex (25% of sales) & net leverage of 1.5-2* with commitment to IG ratings.
  • It was guiding to flat constant currency sales growth for FY24 at FY23 results in late Jan, & increased dividend pay-out to 44% (~CFH 298m) - not alarming given it has headroom on leverage (0.5* leverage/CHF922m net debt on 2b of EBITDA vs. a 1.5*-2* target). It has a ongoing CHF 2b buyback program, 1b used last year.
  • Cash lines for both are unch this morning, credit neg on size of cash use here for Lonza, equities taking it well on guidance lift.
There will be a investor session with Q&A today at 1pm London/9am ET; https://event.choruscall.com/mediaframe/webcast.ht...
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