Swiss pharmaceutical manufacturer Lonza Group AG on Monday confirmed it is in advanced talks with private equity firm KKR & Co LP to acquire Capsugel, a U.S. maker of capsule products and other drug delivery systems.

Sources familiar with the talks told Reuters that a potential transaction would be valued at more than $5 billion.

Capsugel “would fit perfectly with Lonza’s … strategy and strengthen its position as leading supplier to a number of important healthcare markets,” Lonza said in a statement. “A successful acquisition would be value adding and be within Lonza’s stated acquisition criteria.”

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