Carlyle and Hellman poised for $3.9bn take-private

The firms’ $3.9bn acquisition of Pharmaceutical Product Development will be one of the largest recent deals in a hot healthcare and pharmaceutical market.

The Carlyle Group and Hellman & Friedman are poised to acquire Pharmaceutical Product Development (PPD) in a $3.9 billion take-private, according to a statement. The firms have offered to purchase outstanding shares of the company for $33.25 apiece, a 29.6 percent premium on the PPD’s 30 September closing price. The company now has 30 days to solicit a better offer. PPD's board unanimously approved the deal and have recommended the offer to shareholders.

Equity financing for the deal will be provided from the $13.7 billion Carlyle Partners V fund and the $8.9 billion Hellman & Friedman Capital Partners VII vehicle. It is unclear whether the firms will be taking an equal stake in the company. The deal is expected to close in the fourth quarter, pending the approval of PPD’s shareholders.

Debt financing for the deal, which would be one of the largest private equity buyouts of the year, was provided by Credit Suisse, JP Morgan, Goldman Sachs and UBS.

Carlyle and Hellman & Friedman declined to comment beyond the release.

PPD is a global pharmaceutical company that focuses on the discovery and development of new drugs.

The pharmaceutical and healthcare sector has been an active area for private equity, with several firms scoring big exits. KPS Capital Partners’ August sale of Attends Healthcare generated a 15x cash-on-cash return and a 120 percent internal rate of return. CCMP Capital made five times its money after selling Medicare services company CareMore Health Group to health benefits company WellPoint in June. During the first quarter of the year, Bowmark Capital sold Advanced Childcare to GI Partners and Onex sold Emergency Medical Services to Clayton Dubilier & Rice, generating return multiples of 4x and 10x, respectively. 

The promise of high exit multiples has also led several firms to enter the sector,  Last month, New Health Capital Partners secured a $150 million anchor capital commitment from ORIX USA Asset Management for its debut fund targeting pharmaceutical royalties. Centerbridge made a €300 million bet on the sector in August with its investment in Remedi SeniorCare, a Baltimore-based pharmacy that provides pharmacy services to nursing home, assisted living and continuing care retirement communities.

Carlyle, which is based in Washington DC, filed for an initial public offering in last month. The firm expects to raise $100 million when it comes to market next year.