A large majority of shareholders voted in favour of US-based contract research organisation (CRO) Pharmaceutical Product Development’s (PPD) planned merger with affiliates of The Carlyle Group and Hellman & Friedman at a special meeting yesterday.
Earlier this month, the 30-day ‘go-shop’ period under the merger agreement, whereby PPD could solicit or respond to offers more attractive than the US$3.9 billion all-cash deal reached with affiliates of the two private equity firms on 2 October, passed without any formal intervention.
Despite a number of shareholder lawsuits claiming that the US$33.25 per share agreed for PPD undervalued the CRO, some 96.4% of the shares voted on during the special meeting at PPD’s home base in Wilmington, North Carolina were for the merger.
These represented around 75.6% of the company’s total outstanding shares of common stock as of the 24 October 2011 record date.
When rumours started circulating about a PPD sale last July, some commentators were talking about a price tag of up to US$4.3 billion.
The merger, to be effected through Jaguar Holdings, LLC and Jaguar Merger Sub, Inc., vehicles set up for the transaction by affiliates of The Carlyle Group and Hellman & Friedman, is subject to some remaining closing conditions. It is expected to be tied up before year-end.
String of deals
The PPD merger is the latest in a string of deals that have seen private equity move determinedly into the sector.CROs have come under pressure from waning business in some segments as clients trim their R&D pipelines, and from the need to reposition for globalisation, diversification and a shift towards strategic partnerships.
INC Research, which was acquired by private equity firm Avista Capital Partners and Ontario Teachers’ Pension Plan in August 2010, completed its takeover of Kendle in mid-July, while InVentiv Health closed on PharmaNet Development Group at around the same time.
The latter deal had a strong private-equity component. PharmaNet ended a rough financial patch in February 2009 by agreeing to a merger with affiliates of private equity firm JLL Partners, valuing PharmaNet’s common stock at around US$100 million. InVentiv Health was snapped up by private equity firm Thomas H Lee Partners for around US$1.1 billion in May 2010.
Other CROs that have staked their future on private-equity investment in recent years include Omnicare Clinical Research, which in April announced it had been acquired for an undisclosed sum by private equity firm Nautic Partners; Medpace, which in May announced plans for an “equity recapitalisation” with affiliates of CCMP Capital Advisors; and, in the UK, Phlexglobal, ClinTec and Premier Research Group.