The Carlyle Group and Hellman & Friedman to acquire PPD for $3.9 billion

Pharmaceutical Product Development, Inc. (PPD) has announced that it has entered into a definitive merger agreement with The Carlyle Group and Hellman & Friedman, by which PPD will be acquired by The Carlyle Group and Hellman & Friedman’s affiliates in an all-cash transaction for $3.9 billion.

Kelsey Kaustinen
WILMINGTON, N.C.—Pharmaceutical Product Development, Inc.(PPD) has announced that it has entered into a definitive merger agreement withThe Carlyle Group and Hellman & Friedman, by which PPD will be acquired byThe Carlyle Group and Hellman & Friedman's affiliates in an all-cashtransaction for $3.9 billion.
 
"The sale of PPD to The Carlyle Group and Hellman &Friedman provides an attractive return for our shareholders, while alsoensuring a secure foundation and commitment to investment, innovation and excellencefor PPD clients and employees as the company builds on its 25-year history ofsuccess," Fred Eshelman, founder and executive chairman of PPD, said in a pressrelease.
 
 
The Carlyle Group and Hellman & Friedman will acquirePPD's outstanding common shares at $33.25 per share, representing a 29.6percent premium over the closing price of PPD's share on Sept. 30. PPD's boardof directors unanimously approved the merger, recommending to the company'sshareholders that they adopt the agreement. Following the merger, PPD willbecome a private company.
 
 
"Fred Eshelman and PPD's management team have built aleading and extremely high quality global research and services organizationthat will continue to help pharmaceutical and biotech companies develop newdrugs at lower costs," Karen H. Bechtel, managing director and head of thehealthcare group at Carlyle, said in a statement about the deal. "We lookforward to helping expand and enhance PPD's platform and broad spectrum oftherapeutic expertise."
 
 
The terms of the merger agreement state that PPD can solicitadditional acquisition proposals from third parties for 30 calendar days fromthe date of the agreement with Carlyle and Hellman & Friedman, and mayrespond to unsolicited proposals that are deemed by the board of directors tolikely result in a superior proposal. Carlyle and Hellman & Friedmanmaintain the right to match a superior proposal.
 
 
The transaction's closing is subject to certain conditions,approval from PPD's shareholders, regulatory approvals and other customaryclosing conditions. The acquisition has fully committed financing composed ofequity from Carlyle Partners V, L.P., a $13.7 billion U.S. investment fund, andHellman & Friedman Capital Partners VII, L.P., an $8.9 billion fund, as wellas external debt financing commitments provided by Credit Suisse, JP Morgan,Goldman Sachs and UBS.
 
 
"PPD has an outstanding global CRO franchise, and we aredelighted to partner with its highly talented and capable employees around theworld," Allen Thorpe, managing director of Hellman & Friedman, said in apress release. "They are well known for unwavering commitment to their clients,and we look forward to supporting that commitment to bring the broadest anddeepest set of capabilities to PPD's clients. We look forward to the company'scontinued growth and expansion under our ownership."
 
The expected closing period for the transaction is thefourth quarter of 2011, after which PPD will be a privately held company andwill no longer trade its stock on Nasdaq.
 
Morgan Stanley & Co. LLC served as financial advisor forthe transaction, while Lazard provided a fairness opinion to PPD's board ofdirectors. PPD brought Wyrick Robbins Yates & Ponton LLP and Skadden, Arps,Slate, Meagher & Flom LLP on as legal advisors for the deal. Carlyle andHellman & Friedman brought on Latham & Watkins LLP, Simpson Thacher& Bartlett LLP and Covington & Burling LLP as legal advisors for thetransaction, and Credit Suisse as financial advisor.
 
 
 
 
SOURCE: PPD press release

Kelsey Kaustinen

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