BANGALORE (Reuters) – PharmaNet Development Group Inc (PDGI.O), a clinical development services provider, agreed to be bought by private-equity investment firm JLL Partners Inc for a cash price of $5.00 a share, nearly four times its Monday closing price.
The deal values the company at about $98 million based on the number of shares outstanding as of Oct. 31, according to Reuters data, and will be financed by a $250 million equity commitment from JLL, which will begin a tender offer for PharmaNet’s shares.
PharmaNet said the deal includes the necessary funds to retire the $144 million principal amount of its outstanding convertible notes.
“This acquisition averts the risk from the potential cancellation of PharmaNet’s credit facility on Feb. 15, and delays potential solvency issues when the $144 million in convertible debt comes due on Aug. 15,” analyst Jeff Nelson of Ladenburg Thalmann & Co said in a note to clients.
In September, the company had forecast a loss for fiscal 2008, reversing a prior estimate of a profit, citing delay and cancellation of certain ongoing clinical development projects in the late-stage segment and a lower-than-expected sample volume of business in the early-stage segment.
The tender offer by JLL, a New York-based firm with about $4 billion of capital under management, is expected to close by the end of the first quarter of 2009.
“We believe continuing operations as a private company is probably best for PharmaNet,” said Nelson, who downgraded the stock to “neutral” from “buy” and trimmed his price target to $5 from $6.
UBS Investment Bank is acting as exclusive financial adviser to PharmaNet, and Morgan, Lewis & Bockius LLP is acting as the company’s legal counsel.
Shares of the Princeton, New Jersey-based company were trading up 244 percent, or $3.26, at $4.60 early Tuesday morning. The stock was the top percentage gainer on Nasdaq.
(Reporting by Anuradha Ramanathan in Bangalore; Editing by Amitha Rajan) ((email@example.com; within U.S. +1 646 223 8780; outside U.S. +91 80 4135 5800: Reuters Messaging: firstname.lastname@example.org))