Kohlberg Kravis Roberts & Co. L.P.
) has entered the contract research business through its
agreement to purchase clinical research firm PRA International
from Calif.-based Genstar Capital LLC. This private equity
investment firm shelled out approximately $1.3 billion for the
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The transaction is expected to be completed in the third quarter
of this year.
Credit Suisse Group AG
Wells Fargo & Co.
) are acting as advisors for the deal.
PRA International, which has a record of conducting almost 2,000
clinical trials over the past 12 years, is a globally acclaimed
contract research organization (CRO). Among the fastest growing
companies in the CRO business, PRA International also boasts
healthy client relationship and therapeutic expertise.
Private equity firm Genstar acquired PRA International in a
take-private deal in 2007 for $797 million. Since then, PRA
International's European operations have been expanding, along
with the company's expertise and enhanced infrastructure.
Notably, PRA International has generated higher revenues and
earnings than its industry peers.
However, Genstar failed in its attempt to sell the CRO business
in 2011. Recently, the market was abuzz with the news of PRA
going public, similar to Quintiles Transnational Holdings Inc.
For Kohlberg Kravis Roberts, PRA marks its second healthcare
investment over the past one year. In Jun 2012, it announced an
investment in GenesisCare, an Australia-wide network of cancer
and cardiovascular care centers. Since 1995, KKR has invested
roughly $9 billion in healthcare globally.
In the recent past, the pharmaceutical industry has witnessed
many mergers, with 17 moderate to large deals taking place over
the last 4 years. Clinical research service firms are either
being acquired by private equity firms or are becoming public,
with healthy investor demand. The CRO market is expected to be
more profitable, given the rising number of pharmaceutical
companies that are outsourcing the research necessary to enable
drugs to meet regulatory standards.
Kohlberg Kravis Roberts currently carries a Zacks Rank #3 (Hold).