ierrel SpA, the international contract research organisation (CRO) based in Italy, has paid US$2.7 million for the US business of Encorium Group.
The price for the completed deal consisted of US$80,000 in cash and the assumption of US$2.6 million in liabilities. Closing had been delayed from the original target date of 30 June, with adjustments to Encorium’s projected US backlog and to the deficiency allowance set as part of the acquisition agreement.
The amended deal was that Pierrel would pay Encorium 17% of the latter’s US backlog at closing, minus the amount that assumed current liabilities exceeded acquired current assets by more than $500,000. In the original letter of intent, this deficiency allowance was pegged at $350,000.
In connection with the sale, which was effected through the Italian company’s wholly owned US subsidiary, Pierrel Research USA, the latter has taken out a lease on Encorium’s US headquarters in Wayne, Pennsylvania. This frees the US CRO from its remaining lease obligations of around US$3.4 million for a termination fee of US$235,000.
Dr David Ginsberg, chief executive officer (CEO) of Encorium, is taking up the same position at Pierrel Research USA, while Pierrel has offered jobs to “substantially all” of Encorium’s US employees, the CRO noted.
As a result, Pierrel “expects that the US operations will continue largely unchanged and that it will be able to seamlessly continue to deliver the services our customers depend on”, Encorium added.
The CRO’s chief operating officer, Dr Linda Nardone, has left Encorium in conjunction with the US asset sale.