PRA International, which had been exploring a possible initial public stock offering, instead is being sold to Kolberg, kravis & Roberts, a private equity firm.
The purchase price was $1.3 billion, a person briefed on the matter who asked not to be identified because the terms haven’t been disclosed publicly told Bloomberg news.
The purchase is New York-based KKR’s fifth in the U.S. this year and its second in the health-care industry following the buyout firm’s $150 million investment in Sentio Healthcare Properties Inc.
The Raleigh-based clinical trials company had been rumored to be the target of private equity bidders who could buy the company for up to $1.3 billion.
KKR (NYSE: KKR) is one of the world’s largest such companies. Other bidders reportedly included Cionven and Warburg Pincus.
Wall Street responded somewhat negatively to the news. KKR shares opened at $18.30, down from Friday’s close of $18.70 and traded as low as $17.97 amid a general drop in overall stock trading. The stock closed down further at $17.80.
A spokesperson for PRA told WRALTechWire that the companies would not comment further about the deal at the moment. However, a press event is scheduled later today at a life science conference.
Financial terms weren’t disclosed.
PRA is owned by Genstar Capital, a private equity firm based in San Francisco.
“This transaction marks the next stage of our evolution. With KKR as our new partner, we look forward to working with them to accelerate our innovation and growth while continuing to make a difference not only for our clients but also for our people,” said Colin Shannon, PRA’s chief executive officer.
PRA employs more than 5,300 people across 50 offices around the world.
“PRA is a well-positioned global CRO platform led by a talented management team with a long track record of success,” said Jim Momtazee, Member of KKR and Head of KKR’s Health Care investing team. “As one of the fastest growing companies in the CRO sector, PRA is known for its strong client relationships and differentiated therapeutic expertise. PRA management and KKR share the common ambition of building on this platform by continually improving service offerings to clients and providing compelling career opportunities for employees.”
The deal is expected to close in the third quarter.
Jean-Pierre Conte, the chairman and managing director of Genstar, reflected on that firm’s decision to acquire PRA.
“In 2007 we were attracted by the growth opportunities that existed within the CRO industry and particularly with PRA where we believed our leadership team under Colin Shannon could accelerate growth and profitability initiatives to successfully drive change at PRA and build the company on a sustained basis,” he said. “This is an excellent outcome for our investors, PRA and their clients and, importantly, the company continues to have a strong partner in KKR. The PRA leadership team under Colin Shannon has delivered over 100% of what they committed to through a tough economic period. Genstar is proud to have been a part of building this company and working with such a capable leadership team.”
Shannon joined PRA in 2007 and served as chief operating officer for a short time before being promoted to CEO. He had pfreviously worked at PPD, which is based in Wilmington, N.C.
PRA last month filed a confidential draft registration statement with the Securities and Exchange Commission. That’s the document outlining the company’s possible IPO plans. PRA did not indicate either the number of shares to be offered or a price range for the offering. But the company did say that it would use proceeds from the proposed IPO to pay down debt as well as for working capital and corporate purposes.
Reuters said that KKR, Warburg Pincus and Cinven are among those preparing second-round bids later this month to acquire PRA. PRA is currently owned by another private equity firm, Genstar Capital, which acquired PRA in 2007 for $797 million. The sources told Reuters that Genstar would pursue the private equity offering if the private equity bidders fail to meet price expectations. PRA’s value of $1.3 billion is based on annual earnings before interest, tax, depreciation and amortization of about $130 million, the sources said.
The CRO, founded in 1976, relocated its headquarters from Virginia to Raleigh in 2008.
