Pfizer Inc. said Monday it will sell its Capsugel capsule-making business to private equity firm Kohlberg Kravis Robert & Co. for $2.38 billion in cash.

In October, Pfizer said it would review options for Capsugel and might sell the company. Pfizer, which is the world's biggest drugmaker, said it will use the proceeds of the sale to buy back additional stock and may use some of the funds to make other investments or deals.

The New York company said it expects the deal to close during the third quarter, assuming regulators in the U.S., European Union, and other markets approve. Capsugel had $752 million in revenue in 2010 up 2 percent from the previous year. Pfizer cut its 2011 and 2012 revenue forecasts to reflect the sale.

Pfizer said it now expects $65.2 billion to $67.2 billion in revenue in 2011, lowered from $66 billion to $68 billion. The company cut its 2012 revenue forecast to a range of $62.2 billion to $64.7 billion, from $63 billion to $65.5 billion.

Analysts expected Pfizer to report $67.15 billion in revenue this year and $63.38 billion in 2012, according to estimates compiled by FactSet.

The company has been tweaking its business since it acquired Wyeth in October 2009, including cutting research spending and eliminating thousands of jobs. In March it closed a $3.6 billion acquisition of King Pharmaceuticals Inc., a pain drug maker based in Bristol, Tennessee.

Pfizer planned to buy back $5 billion in stock in 2011, not including additional repurchases funded by the Capsugel sale.

Capsugel, based in New Jersey, made 180 billion hard capsules in 2010. Pfizer said Capsugel's corporate headquarters will remain in New Jersey after the sale to KKR, which is based in New York. The business has about 2,800 employees around the world.

Shares of Pfizer rose 20 cents to $20.58 in midday trading.