Acquisition by private equity group Genstar Capital would allow eResearch Technologies (ERT) a more flexible approach and reduce costs according to CEO Jeff Litwin.
The ERT chief made the comments in a Form 8-K the outcomes research services firm filed with the US Securities and Exchange Commission (SEC) yesterday just a few hours after Genstar’s proposed $400m (€305m) takeover bid was announced.
Litwin said that ERT’s market presence, employees, customer relationships and intellectual property portfolio had attracted the bid, and stressed that: “Being privately owned will allow us more flexibility in the way we run the business and means that we will no longer be encumbered by the costs of running a public company.”
Whether this flexibility means ERT will continue its policy of accepting business it would previously have turned down – adopted by Litwin on his appointment as CEO in 2011 – is unclear, however it does appear the firm is expecting a ‘hands off’ approach from its potential new owners.
“Our management team is working on a “business as usual” basis, with the current organization remaining in place. Just as we have always done we will continue looking for ways to improve our products and services,” said Litwin.
He also moved to reassure employees stating that: “Overall, retention and employee satisfaction are very important to Genstar. Genstar does not anticipate any major restructuring or layoffs and has not factored layoffs into its investment returns.
Litwin also said that current expansion projects in Germany and the UK – where ERT plans to add more office space – will not be affected by the takeover.
ERT declined to comment further when contacted by Outsourcing-pharma.com. If approved by shareholders, the deal is expected to close in the third quarter this year.
Speculation that ERT was for sale has been circulating for several months, largely as a result of a report by the DealReporter website on January 19 that cited unnamed company sources.
Garen Sarafian, VP, Healthcare Technology & Distribution at Citi Investment Research, mentioned this in his assessment of the proposed Genstar deal.
“The proposal of ERT being for sale was mentioned in the trade press on January 19th of this year, resulting in shares moving up 10 per cent in a single day. Given that it’s been nearly three months since then, we believe that the sale of ERT has been fully shopped and vetted and do not expect further bidders.”