PharmaNet finds private equity buyer

By Phil Taylor

- Last updated on GMT

Related tags Private equity Stock

Contract research organisation PharmaNet Development Group has found a buyer just a few weeks after saying it was considering placing itself on the block.

PharmaNet has been struggling of late from a series of setbacks, including a number of delayed and cancelled contracts – which have eaten into both sales and profits in recent months.

The company’s saviour is JLL Partners, a private equity company which has tabled a tender offer which values the firm at $100m and also includes the financing includes the funds to retire PharmaNet’s $144m in outstanding convertible notes, which have made it hard for the firm to raise additional funding.

Interestingly, JLL has a subsidiary – JLL Patheon - that also holds a 29 per cent stake in Canadian CRO Patheon and has been saying it is intending to table a bid for the remainder of the company.

That deal has been in the offing since December, and a spokesperson for Patheon would not confirm whether or not the CRO had received an official proposal from JLL Patheon yet, adding that there had been no advance on the position laid out in its last press statement in mid January..

Under Canadian law, the Patheon bid process requires that the CRO respond to JLL’s overture, whereupon the private equity firm may choose to table a formal takeover offer. was unable to reach the private equity firm for comment by the time this article went to press, so it remains unclear whether the PharmaNet transaction has a bearing on JLL Patheon’s proposal.

JLL is paying $5 per share for PharmaNet, more than five times its closing price on Monday but well short of the stock’s 52-week high of more than $40. During the day yesterday PharmaNet’s shares more than tripled to reach $4.64 by the end of trading.

JLL will kick off with the tender offer for PharmaNet’s outstanding shares, and follow this with a merger in which any untendered shares of common stock will be converted into the right to receive the same cash price per share paid in the tender offer.

Commenting on the takeover, PharmaNet president and CEO Jeff McMullen said: “the board of directors and I are very pleased to have a partner in JLL that recognises the substantial value we have built in the PharmaNet Development Group franchise.​"

"We believe this transaction provides meaningful value to our stockholders while providing the solution to address the outstanding convertible notes.​"

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