For some time now, investors have been expecting big things from the providers of outsourced pharmaceutical research and clinical services. The thought has always been that as major pharmaceutical companies like Pfizer (NYSE:PFE) and Merck (NYSE:MRK) conduct mass-firings, the industry would evolve more towards a focus on drug target identification and marketing, and would outsource more and more functions like clinical development. That plan has not exactly lived up to investor expectations and Monday's announcement that Pharmaceutical Product Development (NYSE:PPDI) is selling itself to private buyers, looks to be a curious deal.
The Deal
PPD announced that it had accepted a $3.9 billion all-cash offer from Carlyle and Hellman & Friedman. At a price of $33.25 per share, PPD shareholders are getting a 30% premium to Friday's close and a fairly sizable premium to other major CROs like Covance (NYSE:CVD) and Parexel (Nasdaq:PRXL). By the same token, though, this deal is coming in at the lower end of the range of the company's fair value and shareholders who remember when this stock traded in the $40 range, may not be so thrilled with this deal.
To read more, click below:
http://stocks.investopedia.com/stock-analysis/2011/PPD-Goes-Private-PPDI-CVD-PRXL-CRL-ICLR-ERT-PFE-MRK1005.aspx
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