(Reuters) — Private equity firm Pamplona Capital Management LLP is nearing a deal to acquire U.S. pharmaceutical research services provider Parexel International Corp for more than $4.5 billion, a person familiar with the matter said on Tuesday.
Activist investors, including Starboard Value LP, have put pressure on Parexel to explore a sale, arguing that the company’s profit margins have consistently lagged those of its peers.
The deal will be announced later on Tuesday, the source said. Pamplona is set to pay $88.10 per share in cash for Parexel, the Wall Street Journal reported earlier on Tuesday. Parexel shares ended trading on Monday at $83.92.
The source asked not to be identified because the negotiations are confidential. Parexel and Pamplona did not immediately respond to requests for comment.
Headquartered near Boston, Massachusetts, Parexel provides a range of services to the pharmaceutical industry, ranging from drug development and regulatory consulting, to clinical pharmacology, clinical trials management, and reimbursement.
The company has leadership position in cancer drug research, and a top platform for so-called ‘real-world’ data, which can be used to assess the economic value of medicines and is sought after by drug makers looking to justify their prices to healthcare payers.
Pamplona has been scouring the market in the last year seeking to acquire a contract research organization. It made an unsuccessful bid earlier this year for Pharmaceutical Product Development LLC (PPD), a U.S. clinical trials firm valued at more than $9 billion.
Overall, the contract research industry has benefited from the pharmaceutical companies’ drive to cut costs, reduce clinical trial times and expand their research and development presence around the world.
Many companies in the sector are now turning to dealmaking, as they seek to boost their real-world data gathering capabilities.
Last month, INC Research Holdings Inc agreed to merge with inVentiv Health Inc in a $4.6 billion deal.
Last year, contract researcher Quintiles Transnational Holdings Inc completed a $9 billion merger with IMS Health Holdings Inc.