GIC 'in talks over US clinical trials firm'

The GIC corporate logo seen during the GIC Staff Conference in Singapore.
The GIC corporate logo seen during the GIC Staff Conference in Singapore.PHOTO: BLOOMBERG

Fund among investors eyeing minority stakes in company valued at over $12.5b, sources say

NEW YORK • Two buyout firms that own Pharmaceutical Product Development (PPD) are in advanced talks to sell minority stakes in the US clinical trials firm to investors that include Singapore's sovereign wealth fund GIC and Abu Dhabi Investment Authority.

The sale would be at a price that would value the entire company at more than US$9 billion (S$12.5 billion), including debt, said people familiar with the matter.

The deal would see PPD's owners, Carlyle Group and Hellman & Friedman, continue to control the company jointly, the people said.

Carlyle currently owns 60 per cent of PPD and Hellman & Friedman owns 40 per cent, with the two sharing governance rights.

They are in talks to sell minority stakes in PPD, but would continue to collectively own more than half the company.

The exact deal structure is still being hammered out, and negotiations are expected to continue for much of April, with no certainty that a deal will be reached, the sources added.

  • 60%

    Carlyle's current share of PPD.

    40%

    Hellman & Friedman's share.

An alternative deal is still possible. Carlyle and Hellman & Friedman considered an offer for the entirety of PPD earlier this month from private equity firm Pamplona Capital Management, which had financial backing from investment firm LetterOne Holdings.

However, Pamplona's offer did not value PPD as highly as the minority equity investors, according to the sources.

Carlyle and Hellman & Friedman declined to comment, while PPD, GIC, Abu Dhabi Investment Authority, Pamplona and LetterOne did not immediately respond to requests for comment.

A deal for PPD would underscore how the contract research organisation industry has benefited in recent years from the pharmaceutical companies' drive to cut costs, reduce clinical trial times and expand their research and development presence around the world.

The transaction would also highlight the value of PPD's significant scale in what is otherwise a fragmented industry.

Based in Wilmington, North Carolina, PPD offers its services to biotech, pharmaceutical and medical device companies that wish to outsource research services. It focuses its research on a wide range of therapeutic areas, ranging from cardiovascular field to urology.

Carlyle and Hellman & Friedman took PPD private in 2011 for US$3.9 billion. Under their ownership, PPD's 12-month earnings before interest, taxes, depreciation and amortisation of US$340 million have more than doubled.

Laboratory Corporation of America Holdings explored an acquisition of PPD earlier this year, Reuters reported in February.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 30, 2017, with the headline 'GIC 'in talks over US clinical trials firm''. Print Edition | Subscribe