Glaxo Finds Buyer in California for North Carolina Plant

Glaxo Wellcome will sell its pharmaceutical production plant in Greenville, N.C., to a medium-size California company in a deal that will save hundreds of jobs, the companies said Wednesday.

Catalytica Inc. has signed a letter of intent to acquire land, buildings and equipment at the 1.8-million-square-foot site in Greenville for an undisclosed amount, the companies said in a joint announcement.

The move is part of an expansion for Catalytica Fine Chemicals, a unit of the Mountain View firm, and ends a 14-month search by the world’s largest drug maker to sell the plant.

Glaxo Wellcome spokesman Rick Sluder said the sale is in the best interest of all the parties. He said the drug maker worked with Catalytica in part because the company will continue to employ current Glaxo Wellcome workers.

“With a highly skilled work force, it seems like a win-win situation for us, Catalytica and Greenville,” Sluder said.

Glaxo Wellcome, which has its American headquarters in Research Triangle Park, N.C., also will receive shares of Catalytica Fine Chemicals amounting to an equity stake of less than 5%, Sluder said.

Shares of Catalytica rose $2.44 to close at $6.56 on Nasdaq. American depositary shares of Glaxo Wellcome lost 12.5 cents to close at $32.125 on the New York Stock Exchange. Glaxo is based in London. The two companies also have a tentative five-year agreement in which Catalytica will manufacture prescription products for Glaxo Wellcome. In return, Glaxo Wellcome will share in some of the plant’s profit.

Catalytica expects the agreement to generate $800 million in revenue at the plant over the next five years.

The deal, if completed as expected this summer, would also mean that nearly all of the plant’s 1,100 workers will keep their jobs.

“We will truly be a long-term partner,” said James Cusumano, chairman of Catalytica Fine Chemicals. The Greenville plant was chosen from 20 potential North American sites by Catalytica. “We found North Carolina and Greenville particularly friendly.”

An unidentified number of jobs may be trimmed from the work force, but the number is expected to be small, Cusumano said.

The deal would reduce Glaxo Wellcome’s work force in North Carolina to about 4,600, Sluder said.

The plant, which was owned by Burroughs Wellcome before the two companies merged, had 1,600 workers in 1995, when Glaxo Wellcome announced it would shift its prescription medicine production to its plant near Raleigh, N.C., and reduce the plant’s work force to about 350 workers.

But in late 1995, Glaxo Wellcome Inc. said it was looking for buyers for the plant after selling its rights to over-the-counter medicines to Warner-Lambert Inc.

Catalytica Fine Chemicals also has partnerships with pharmaceutical companies such as Pharmacia & Upjohn, Merck & Co. and Pfizer Inc., which has a 15% stake in the company. Project sales for the subsidiary are expected to total $15 million.