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.
