Wednesday, Roche Holding AG (OTC:RHHBY) entered into a definitive agreement with Lonza Group Ltd (OTC:LZAGF) (OTC:LZAGY).

Under the agreement, Lonza will acquire the Genentech manufacturing facility in Vacaville, California, for $1.2 billion in conjunction with a manufacturing agreement and related quality services and warehousing.

Under the terms of the agreement, Lonza will offer approximately 750 Genentech employees at the Vacaville facility employment, and the products currently produced at the site by Roche will continue to be supplied by Lonza for a transition period.

The acquisition will increase Lonza's large-scale biologics manufacturing capacity. The Vacaville (US) facility currently has a total bioreactor capacity of around 330,000 liters, making it one of the largest biologics manufacturing sites in the world by volume.

Lonza plans to invest approximately CHF 500 million in additional Capex to upgrade the Vacaville (US) facility and enhance capabilities to satisfy demand for the next generation of mammalian biologics therapies.

The products currently manufactured at the site by Roche will be supplied by Lonza, with committed volumes over the medium term, phasing out over time as the site transitions to serve alternative customers.

As the transaction is expected to be accretive to sales growth, Lonza has updated its mid-term guidance for 2024–2028.

Its sales growth range was set at 11–13% CAGR in CER and has now been updated to 12 – 15%.

Mid-term guidance for core EBITDA margin and ROIC remains unchanged.

The transaction is expected to close by H2 2024.