EXCLUSIVE: Lonza in talks to buy Capsugel for more than $5 billion - sources

By Greg Roumeliotis

(Reuters) - Swiss pharmaceutical manufacturer Lonza Group AG is in advanced talks to acquire Capsugel, a U.S. maker of capsule products and other drug delivery systems, for more than $5 billion, according to people familiar with the matter.

The deal would come as Lonza seeks to boost its life sciences capabilities and produce a wider range of molecules used in active pharmaceutical ingredients and drug delivery. It held unsuccessful talks to acquire U.S. drug delivery technology company Catalent Inc earlier this year.

Discussions between Lonza and Capsugel's owner, private equity firm KKR & Co LP, could lead to a deal as early this week, the people said on Sunday, cautioning that it was still possible for the negotiations to fall through.

The sources asked not to be identified because the negotiations are confidential. Capsugel, Lonza and KKR did not immediately respond to requests for comment.

Based in Morristown, New Jersey, Capsugel manufacturers empty two-piece hard capsules as well as finished dosage forms for drug delivery. It serves more than 4,000 corporate customers in over 100 countries.

Reuters reported in March that KKR was preparing to run a sale process for Capsugel this year, and also explore the possibility of an initial public offering of the company as an alternative to an outright sale.

KKR acquired Capsugel from Pfizer Inc for $2.4 billion in 2011.

Lonza has been expanding its presence in the United States in recent years, buying up small biopharmaceutical companies and, in 2011, acquiring chemical maker Arch Chemicals for $1.4 billion. Lonza has a market capitalization of 9.4 billion Swiss francs ($9.25 billion).

(Reporting by Greg Roumeliotis in New York; Editing by Bernard Orr and Alan Crosby)