PPDI Shareholders Nod to Merger - Analyst Blog
December 02 2011 - 06:00AM
Zacks
Pharmaceutical drug research company Pharmaceutical
Product Development, Inc. (PPDI) recently announced that
its shareholders have approved the merger with privately held firms
The Carlyle Group and Hellman & Friedman. The merger was
announced in October 2011.
PPD shareholders have been offered a cash consideration of
$33.25 per share. The total purchase consideration comes to $3.9
billion in cash. The merger is now subject to certain closing
conditions and is expected to close before the end of 2011,
following which PPD will become a private company and will no
longer trade on NASDAQ.
Four banks have committed to finance the deal. These include
Credit Suisse (CS), JP
Morgan (JPM), Goldman Sachs (GS) and
UBS (UBS). Because of the buyout, PPD did not hold
a conference call to discuss the third quarter results.
Our Recommendation
We currently have a Hold recommendation on PPD. The company
retains a Zacks #3 Rank, which translates into a short-term Hold
rating. We are impressed by the company’s strong bookings, stable
backlog duration and sound expense control.
PPD is a leading contract research organization (CRO) providing
drug discovery and development services to pharmaceutical and
biotechnology companies. Companies like PPD and Charles
River Laboratories (CRL) suffered in 2008-2009 due to a
decline in demand for their services in time of a depressed
economy.
The environment for CROs is gradually improving. Higher request
for proposals (RFP) flows and key strategic partnerships secured by
PPD with bio-pharma customers are a testament to such a revival,
which would in turn result in bottom-line growth. However, we
remain concerned about the high cancellation rates.
CHARLES RVR LAB (CRL): Free Stock Analysis Report
CREDIT SUISSE (CS): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
PHARMA PROD DEV (PPDI): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
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