UPDATE 1-KKR to buy clinical trials firm PRA International
June 24 (Reuters) - Funds managed by KKR & Co LP will buy clinical research group PRA International from Genstar Capital LLC for an undisclosed amount, PRA said on Monday, underscoring growing private equity interest in the contract research industry.
Terms of the deal were not disclosed, but a person familiar with the matter said the agreed price was around $1.3 billion. That was in line with the amount, Reuters reported earlier this month, that PRA could fetch in the auction conducted for the contract research firm.
"Over the past several years, we have witnessed a dramatic increase in M&A within the pharma services industry, with 17 moderate-to-large deals occurring over the past four years," Sterne Agee analyst Greg Bolan said in a research note.
Clinical research service firms are either being snapped up by private equity firms willing to pay top dollar or are being taken public in offerings that attract strong investor demand in a bet that the pharmaceutical industry, for cost reasons, will continue to outsource the research needed to get drugs approved by regulators.
Genstar bought PRA in 2007 for $797 million and put it on the block earlier this year after failing to sell it in 2011.
The market is now more generous toward such companies. Last month, Bain Capital LLC and TPG Capital LP raised $947 million by taking public Quintiles Transnational Holdings, the world's largest provider of contract research services.
PRA says it provides clinical trial services and other research for pharmaceutical companies in more than 80 countries to help them win regulatory approval for drugs.
Jefferies LLC was financial adviser to PRA and Latham & Watkins was legal adviser. Credit Suisse, UBS Investment Bank and Wells Fargo were financial advisers to KKR, while Simpson Thacher & Bartlett LLP was legal adviser.