- Parexel International, a global biopharma services provider, has been bought up by private equity firm Pamplona Capital Management for $88.10 per share in an all-cash deal valued at roughly $5 billion.
- The deal includes Parexel's net debt, which stood at $428 million at the end of the first three months of 2017.
- At $88.10 a share, Pamplona is paying a 28% premium to Parexel's May 5 closing share price, the date when The Wall Street Journal first reported the contract research firm was considering a sale.
Pressure has been increasing on Parexel to pursue a sale over the past several months.
In May, the New York-based investment advisor Starboard Value took a 5.7% stake in Parexel, stating in a filing with the Securities and Exchange Commission that Parexel shares were "substantially undervalued and represented an attractive investment opportunity." At the time, Starboard Value said it understood that Parexel might be working with investment bankers to pursue a sale.
Starboard Value wasn't the only activist investor to buy into Parexel either. According to May report from Reuters, Jana Partners and Corvex Management also invested in the CRO. Corvex appears to have been agitating for the sale, although neither company appear to have been particularly open about its involvement.
All of this was set against the backdrop of an ongoing restructuring aimed at "right-sizing" the company and improving operating margins. In May, Parexel said it would eliminate 1,200 jobs and look to shift positions to lower-cost locations such as India.
"As our results over the past year show, the market for biopharmaceutical services is evolving," company CEO Josef von Rickenbach said in a statement on the buyout. "We believe the more flexible corporate structure afforded by this transaction will better position us to advance Parexel’s strategy in light of these realities and to shape the Company to best capitalize on our exciting market opportunities."
Parexel expects the transaction to close early in the fourth quarter, when it would delist from public trading and become privately held.
Pamplona's deal for Parexel comes amid a flurry of takeovers and consolidation in the contract services sector.
In May 2016, IMS Health merged with the world's largest CRO, Quintiles, creating QuintilesIMS and a company with a market capitalization that now stands just shy of $20 billion. Over the past two months, InVentiv Health and INC Research merged to create a $7.4 billion CRO and Thermo Fisher bought up Dutch contract development and manufacturing organization (CDMO) Patheon for $7.2 billion.