PharmaNet now private as JLL deal goes through

By Phil Taylor

- Last updated on GMT

Related tags Private equity Stock Stock market

Top 10 contract research organization (CRO) PharmaNet has gone into private hands following the conclusion of its acquisition by private equity firm JLL Partners.

The merger followed the successful completion of JLL’s tender offer to purchase all outstanding PharmaNet shares at a price of $5 per share in cash, valuing outstanding shares at approximately $100m.

JLL is also hoping to add to its outsourcing portfolio with a $2-per-share bid for Canadian contract manufacturer Patheon, although the latter is resisting its advances.

Private equity firms are mindful of the pressure that CROs and CMOs are under at the moment. Given that the pharmaceutical outsourcing juggernaut looks likely to accelerate rather than slow down in the long-term, firms such as JLL are hoping to snap up providers at bargain prices while their share prices are low.

PharmaNet saw its share price all-but annihilated in recent months. A little over a year ago the stock was running at $40, but at the time of JLL’s bid earlier this year was trading around $1.

This was partly a result of the general downturn in the CRO sector, but also reflected a higher than average rate of cancellations that left PharmaNet overstaffed in the latter half of 2008.

PharmaNet’s common stock has now ceased trading on the NASDAQ.

JLL financed the purchase with a $250m equity commitment, including funds to retire the $144m principal amount of PharmaNet’s outstanding convertible notes. These were issued back in 2004, when SFBC took over the company, and made it hard for PharmaNet to raise additional funding.

Meanwhile another CRO facing a difficult operating environment and declining revenues, Canada’s MDS Pharma Services, has also embarked on a ‘strategic review’ that could end with it placing itself on the block. The private equity community is likely to be looking closely at that opportunity.

Related topics Preclinical Research

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