Lonza to Buy Five Merck KGaA U.S. CDMO Sites for Up to CHF 500 Million

Lonza has agreed to pay between CHF 100 million and CHF 500 million — roughly $122 million to $608 million — for five U.S. contract development and manufacturing sites owned by Merck KGaA, in a transaction the two companies would describe only as valued "in the low- to mid-triple-digit millions Swiss francs." The purchase would more than double Lonza's U.S. CDMO network, from four sites to nine, and add approximately 1,100 employees, growing the company's U.S. workforce by nearly 25% to more than 6,000 people.

The vague price range is the first caveat in this deal. Neither party disclosed a precise figure, and the CHF 100–500 million span is wide enough to cover anything from a modest bolt-on to a substantial acquisition. Buyers ofLonza's scale — the company generated CHF 6.531 billion (about $8 billion) in 2025 revenue — can absorb a deal of this size without strain, which the company confirmed by stating it will pay with cash at hand and existing credit facilities while keeping its BBB+ rating.

What capabilities does Lonza actually gain?

The acquired sites, as listed by Lonza, span four modality clusters across five locations:

• St. Louis, MO — bioconjugates
• Madison and Verona, WI — high-potency payload-linkers
• Carlsbad, CA — end-to-end viral vector solutions, including aseptic fill-finish
• Indianapolis — lipid nanoparticle, liposome and PEGylated protein solutions, also with aseptic fill-finish

The payload-linker sites feed directly into antibody-drug conjugate (ADC) supply chains, where Lonza cites "high demand." For R&D managers running cell and gene therapy programs, the Carlsbad viral vector asset with integrated fill-finish addresses a known bottleneck: moving from clinical batches to commercial aseptic filling. Whether the transferred capacity meets Lonza's quality and throughput standards remains untested until integration is complete.

Is the acquired business profitable today?

Not at Lonza's level. The sites are expected to generate combined sales of approximately CHF 250 million ($304 million) at a core EBITDA margin below Lonza's group margin — an impact Lonza itself calls "insignificant" on the group. In plain terms, Lonza is buying roughly a quarter-billion francs of revenue that currently earns less per franc of sales than its existing operations.

The bullish case rests on projections, not measured results. Lonza says the sites will use existing spare capacity and expansion space to deliver "significant, profitable" growth, and it "anticipates the business to reach peak sales at Lonza's future group margin level by mid-2030s." That is a target roughly a decade out, contingent on further investment, market demand, and successful integration of 1,100 employees moving from a diversified German parent to a pure-play CDMO.

CEO Wolfgang Wienand framed the deal as consistent with the company's capital discipline: "This acquisition is a strong fit with our One Lonza strategy and reflects our disciplined approach to capital allocation, investing in opportunities that will drive long-term, profitable growth and deliver attractive returns." He added: "It will significantly expand our U.S. presence, bringing us even closer to our customers, while increasing the resilience of our global manufacturing network."

Why is Merck KGaA selling?

For Merck KGaA, the divestment sharpens its Life Science sector, which keeps its consumables, technologies and services business serving pharma, biotech and CDMO customers from discovery through manufacturing. Group CEO Kai Beckmann called the sale "another important step in advancing our mid- to long-term strategic agenda."

"A more concentrated Life Science portfolio will allow us to focus our investments on building our scientific leadership and make us an even stronger partner for our customers," Beckmann said. "Our CDMO teams have built a strong foundation through their expertise and commitment. We believe Lonza is well positioned to build on that foundation."

That framing deserves scrutiny: a business described as having a "strong foundation" is being sold at a sub-group margin, which suggests Merck saw limited path to premium returns in a competitive CDMO market. The Life Science sector itself remains healthy, reporting first-half 2026 net sales of €4.677 billion ($5.236 billion), up 4.3% from €4.485 billion a year earlier, with Q2 sales of €2.412 billion, up 6.4%.

How does this fit Lonza's wider expansion?

The Merck deal continues a two-year U.S. build-out. In 2024, Lonza paid $1.2 billion for the large-scale biologics plant in Vacaville, CA, built by Roche's Genentech unit. In September, it announced a commercial-scale spray-drying facility in Bend, OR, intended to make it the leading U.S. CDMO provider of PSD-4 spray-drying capacity. Topping GEN's most recent Top 10 CDMO ranking, Lonza is now layering modalities — ADC components, viral vectors, lipid nanoparticles — onto that foundation.

Lonza has also upgraded its targets since becoming a pure-play CDMO: organic sales growth of 10–13% at constant exchange rates, core EBITDA margin "in the high thirties" mid-term, and ROIC of two to three times weighted average cost of capital as of 2026. For 2026, it guides to 11–12% CER sales growth, a 33–34% core EBITDA margin, and a negative FX impact of about 2–3%. The Merck sites must be lifted from below-group margins toward those levels for the deal's math to work.

The transaction is expected to close in mid-2027, subject to customary conditions. It will not affect Lonza's planned share buyback following the CHF 2.3 billion ($2.797 billion) sale of its Capsules & Health Ingredients business to Lone Star Funds, which is set to close by year's end. Merck KGaA reports third-quarter results on November 12.