DSM to acquire Catalytica, which will spin off non-pharmaceutical businesses

At the close of business on December 15, two new, catalysis-driven companies came into existence: DSM Catalytica Pharmaceuticals, and Catalytica Energy Systems Inc. The entities result from DSM's (Heerlen, Netherlands) announcement earlier in the year to purchase Catalytica Inc. (Mountain View, CA) for approximately $800 million. Simultaneously with the purchase completion, the non-pharmaceutical parts of Catalytica, currently known as Catalytica Combustion Systems Inc., and Catalytica Advanced Technologies Inc., were combined as Catalytica Energy Systems Inc.

Shareholders of Catalytica Inc. will receive a combination of cash and shares in Catalytica Energy Systems, which will be traded on the Nasdaq as CESI. Catalytica will invest $50 million in Catalytica Energy to give it operating capital. Ricardo Levy, current president of Catalytica, will be chairman of the board of Catalytica Energy Systems; Craig Kitchen, who joined Catalytica last July as president of its Combustion subsidiary, will be president of the new company. Catalytica Inc. grossed $424 million in 1999.

DSM, the multinational with diverse businesses in life sciences, polymers, and chemicals, gets an enhanced U.S. presence and a strong foothold in the contract pharmaceutical-manufacturing business. In recent years, Catalytica had invested in and acquired pharmaceutical manufacturing capacity. It bought a Greenville, North Carolina plant from Glaxo Wellcome in 1997, and acquired Wyckhoff Chemical Co., a contract manufacturer headquartered in South Haven, Michigan, in 1999.

By all appearances, the bulk of catalyst-development expertise will be going with Catalytica Energy. That company has a promising new combustion technology, Xonon, for low-emissions power generation from gas, and the Catalyst Development Engine, a "data to knowledge" system that combines informatics, advanced relational database, molecular modeling, micro-kinetic modeling, data mining, pattern recognition, predictive knowledge systems, automated workstations, miniaturization, and robotics.

Most recently, the company had announced a venture with Allied-Signal (now the Honeywell acquisition of GE) and Sud-Chemie for boron co-catalysts for polymerization.

By Nick Basta
Editorial Director, E-Catalysts.com

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