Russian fund “Pamplona” acquires American “Parexel” for $5 billion

Parexel
Parexel

Pamplona Capital Management fund that’s managing money of Russian Alfa-Bank shareholders bought “Parexel” the US service provider in the field of pharmaceuticals. The amount of the transaction came to $5 billion, including debt. It is expected that the transaction will be closed in the IV quarter of 2017 when Pamplona will complete the aquisition all issued shares of Parexel International Corp., paying $88,1 per share which includes 23.3% premium on the top of maximum price over the year. After the transaction Parexel will conduct delisting, said Pamplona’s spokesman.

Parexel provides pharmaceutical companies with research. The company has 86 offices in 51 countries and about 19 600 employees. 2016 revenue was $2,094 billion (+3,9%), net profit of $155 million (+4,8%) (the reporting period ended on June 30, 2016). 57% of Parexel revenue comes from its foreign operations where Russian subsidiary is one of the largest contract research organizations. “At Parexel we have 13 permits for conducting international multicenter clinical trials (IMCT) which are held in several countries and the company holds the fourth place among contract organizations”, as per statement of the Association of Clinical Research Organizations (ACRO). According to ACRO, in just 2016, the Ministry of Health of Russia issued 302 permits for conducting IMCTs.

Shareholders generally do not influence the country selection for studies, says the ACRO Executive Director Svetlana Zavidova. According to her, it is defined by a sponsor pharmaceutical company whose drug is being researched, and the contract organization can advise the country on the basis of sponsor interests. Parexel has partnered with all major pharmaceutical companies, including Pfizer, GSK, AstraZeneca.

Pamplona Capital Management was founded in 2005 by a former top manager and co-owner of Alfa-Bank Alex Knaster. The first fund of the company was fully formed at the expense of the shareholders of “Alfa group” of Mikhail Friedman, Herman Khan and Alexey Kuzmichev. The Fund manages assets of more than $10 billion in financial technology, IT services, Internet media, and health.

2 Comments

  1. Monteverde & Associates PC, a boutique securities firm headquartered at the Empire State Building in New York City, is investigating PAREXEL International Corporation (NasdaqGS: PRXL) relating to the sale of the Company to affiliates of Pamplona Capital Management, LLP. As a result of the merger, PAREXEL shareholders are only anticipated to receive $81.10 per share in cash in exchange for each share of PAREXEL.
    The investigation focuses on whether PAREXEL and its Board of Directors violated securities laws and/or breached their fiduciary duties to the Company’s by 1) failing to conduct a fair process 2) whether and by how much this proposed transaction undervalues the Company by and 3) failing to disclose all material financial information in connection with the upcoming shareholder meeting.

  2. The Merger Agreement contains certain termination rights for the Company and Parent, including the right of the Company to terminate the Merger Agreement to accept a Superior Proposal, subject to specified limitations, and provides that, upon termination of the Merger Agreement by the Company or Parent upon specified conditions, the Company will be required to pay Parent a termination fee of $138 million under specified conditions where the Company terminates the Merger Agreement in connection with its entry into a Superior Proposal.

    The Merger Agreement also provides that Parent will be required to pay the Company a reverse termination fee of $276 million (the “Parent Termination Fee”) upon the termination of the Merger Agreement by the Company under specified conditions. Pamplona Investment Partners I, L.P. has entered into a limited guarantee with the Company to guarantee Parent’s obligation to pay the Company the Parent Termination Fee and make certain other specified payments to the Company, subject to the terms and conditions set forth in the limited guarantee.

    In addition to the foregoing termination rights, and subject to certain limitations, either party may terminate the Merger Agreement if the Merger is not consummated by March 19, 2018.

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