2017 is the year of the CRO deals. In the first four-and-a-half months of 2017, 17 deals targeting a CRO (contract research organization) have been announced, with disclosed spending of approximately $13.8 billion.
Just a few weeks after Hellman & Friedman LLC took over the majority stake in Pharmaceutical Product Development, LLC (PPD) for $9.05 billion in April, the CRO market witnessed another mega deal.
On May 11, 2017, INC Research Holdings, Inc. (NASDAQ: INCR) a contract research organization providing Phase 1 to Phase 4 clinical development services, announced that it merged with privately-held inVentiv Health in an all-stock transaction valued at $4.6 billion. The combination will create a top 3 CRO globally, with an enterprise value of $7.4 billion and net revenue of $3.2 billion
inVentiv Health provides CRO and contract commercial organization (CCO) services to accelerate the delivery of therapies to the biopharmaceutical market. Based upon the closing price of INC Research common stock on Tuesday, May 9, 2017, the transaction values inVentiv at an enterprise value of approximately $4.6 billion. INC shareholders will own about 53% of the new company and the rest will be held by Advent International and Thomas H. Lee Partners, equal equity owners in InVentiv.
Thomas H. Lee Partners (THL) acquired inVentiv in 2010 for $1.1 billion, or $26 per share, in a going private transaction. At the time, inVentiv disclosed revenue of $1.08 billion and EBITDA of $137 million on a trailing 12-month basis, according to our database.
By August 2016, inVentiv Health more than doubled both revenue and adjusted EBITDA to $2.2 billion and $343 million, respectively, under THL’s ownership.
Advent offered to buy inVentiv in July 2016, when the company was seeking to go public at a valuation of over $4 billion including debt. Advent eventually invested in the company in August, valuing it at $3.8 billion on a cash-free, debt-free basis. As a result of that investment, inVentiv called off plans to pursue an initial public offering of its common stock.
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