US-based contract research organisation Pharmaceutical Product Development (PPD) reported a 15% improvement in operating income for the third quarter of 2011, as it edged closer to the merger agreed last month with affiliates of private equity firms The Carlyle Group and Hellman & Friedman.
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 Carlyle Group and Hellman & Friedman on 2 October, has now expired without incident, despite speculation that InVentiv Health might step in.
The agreed merger is expected to close in the fourth quarter of 2011.
For the three months ended 30 September 2011, PPD’s operating income was US$65.4 million, 15.1% higher than in the third quarter of 2010. Net income per diluted share slipped back 3.1% year on year, however, to US$0.31.
Net service revenues rose by 12.8% to US$382.9 million. Of the US$43.5 million increase in service revenues overall versus the third quarter of 2011, US$31.7 million came from PPD’s Clinical Development Services segment and US$11.8 million from its Laboratory Services business.
Net authorisations – defined as new authorisations minus cancellations and adjustments – came to US$542.2 million in Q3 2011, a 22.4% increase over the same period in 2010. The cancellation rate for the third quarter was 6.3% of beginning backlog compared with 6.9% for the same period of 2010.
Backlog stood at .US$3.8 billion as of 30 September 2011, against US$3.4 billion at 30 September 2010.
In its Form 10-Q filing with the US Securities and Exchange Commission, PPD said it planned to continue pursuing and establishing innovative and strategic client relationships during the remainder of 2011, while tightening its focus on execution and quality.
The company also expected to broaden the scope of its discovery services offerings through new technologies that should differentiate PPD from its competitors, it noted.
Merger vehiclesThe merger will 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.
PPD shareholders will get US$33.25 in cash for each share of common stock under the merger agreement, which remains subject to customary closing conditions, anti-trust clearance in some jurisdictions and approval by PPD’s shareholders.