FORT WASHINGTON, Pa.—ReSearch Pharmaceutical Services Inc. (RPS) has agreed to be bought by global private equity firm Warburg Pincus LLC, in an all-cash deal valued at approximately $227.3 million.In June, clinical research firm RPS filed for an initial public offering with U.S. regulators.
On Dec. 28, RPS announced an agreement to sell the company to affiliates of Warburg Pincus at $6.10 per share. RPS' board of directors unanimously approved the acquisition agreement and recommended that the company's shareholders approve the transaction.
Warburg Pincus has 37.3 million outstanding shares, according to the company's latest regulatory filing. RPS anticipates the closing of the transaction will occur sometime this month.
Executives from RPS and Warburg Pincus declined requests from ddn for interviews, preferring to let joint press statements suffice.
Daniel M. Perlman, RPS chairman and CEO, shed some light on the decision in a statement released by the companies: "With the rapid organic expansion of RPS, it is important that we look to the future growth of our company and further leverage the unique business model we bring to the biopharmaceutical industry, fortifying our financial structure and industry expertise to successfully execute our model and continue to expand our capabilities.
"In Warburg Pincus, we have found a partner with both the financial strength and relevant industry experience to enable us to accelerate the execution of our growth strategy," Perlman continued, adding the partnership "emphasizes our commitment to our employees and clients to continue to deliver innovative global business solutions encompassing world-class quality with significant cost savings."
Jonathan S. Leff, managing director of Warburg Pincus, said RPS's integrated outsourcing model has attracted many of the world's leading pharmaceutical and biotechnology companies as customers by delivering cost savings and enhanced flexibility, while allowing customers to maintain control of their clinical trials.
Leff added, "What excites us most about RPS is the company's pioneering approach to outsourcing of clinical development. RPS has developed a model that uniquely meets the needs of the biopharmaceutical industry. As we deploy our strong capital base in partnership with Dan Perlman and the management team, we believe that RPS is very well positioned to continue its impressive track record of growth."
RPS intends to continue advancing its current strategy under the leadership of its existing management team. In addition, "the company, together with its new financial partner Warburg Pincus, will look for opportunities to accelerate its growth through the development of enhanced service offerings and expanded international capabilities."
The transaction is subject to various closing conditions, including the filing with the U.S. Securities and Exchange Commission (SEC) of an Information Statement on Schedule 14C and the distribution of the Information Statement to all of RPS' stockholders.
In a regulatory filing, RPS stated it may have to pay Warburg a fee of $10 million, and Warburg may have to pay it a reverse fee of $40 million, if the merger agreement is terminated.
On its website, RPS describes itself as a "next-generation CRO that provides comprehensive global Phase I-IV clinical development solutions to the pharmaceutical, biotechnology and medical device industries." With its clinical research operations infrastructure and the industry's largest resourcing engines, RPS says it is uniquely positioned to offer clients a broad spectrum of outsourcing solutions ranging from globally embedded functional and cross-functional solutions to enhanced global full-service solutions.
Perlman founded the company in 1998 as the first pharmaceutical resource organization to become a strategic solution provider to the pharmaceutical industry. RPS has become one of the fastest-growing companies in the industry, growing from inception to more than 1,300 employees and taking the company public in 2007. Perlman's model "embodies integrated solutions which have become an industry example of true strategic partnerships between sponsors and vendors. In addition, the model provides a solution to rising costs and decreased efficiencies that face the industry," according to the company.
Warburg Pincus is a global leader in the industry it helped create—private equity—according to its website. With 40-plus years of experience, Warburg Pincus invested more than $35 billion in approximately 600 companies in more than 30 countries around the world. The firm has offices in Beijing, Frankfurt, Hong Kong, London, Mumbai, New York, San Francisco, Sao Paulo and Shanghai.
"At the heart of our approach to investing is an emphasis on building businesses that withstand the test of time," Warburg Pincus says. "With an average investment period of five to seven years, we take an unusually long-term perspective."
