PE deemed more likely suitor for Quintiles’ contract-sales unit

The contract-sales business of Quintiles IMS is fielding looks from a limited group of sponsors and strategics, three sources told Buyouts.

Quintiles, Danbury, Connecticut, is projecting the contract-sales business will generate adjusted EBITDA of about $60 million to $65 million in 2017, the people said. The unit is projected to generate just shy of $800 million in revenue in 2017, one source said.

The Goldman Sachs-run sales process could produce a deal valued at a multiple of EBITDA ranging from 8x to 9x, predicted another one of the sources. That would suggest a deal valued around $500 million based on projected 2017 figures.

Reuters initially reported in late June that Quintiles had hired Goldman to run a sales process.

Quintiles, the worlds’ largest contract-research organization, and IMS Health, a drug data and consulting firm, completed a $17.6 billion merger-of-equals transaction in October 2016.

Besides a small handful of private equity groups participating in the process, at least one strategic, U.K.-listed UDG Healthcare plc, is said to be in the mix, the sources said.

While a transaction with Dublin-based UDG could create significant synergies, a proposal from a financial buyer is likely to present more certainty, one source said.

UDG’s contract-sales outsourcing arm competes directly with the Quintiles unit, so such a deal would likely require time to gain antitrust clearance, the source explained. A potential shareholder vote on UDG’s end could add further uncertainty, this person added.

Besides UDG, INC Research/inVentiv would be a logical suitor if the newly formed company hadn’t just completed its own megamerger, this source and another said.

Publicly traded INC Research Holdings and inVentiv Health, backed by Thomas H. Lee and Advent International, agreed to combine in a $4.6 billion all-stock deal in May. The deal closing was announced Aug. 1.

Whether the strategic is in the mix is uncertain. While it would present a major synergy play for InVentiv’s substantially larger contract commercial operations, it would be surprising given the timing, one source said.

From Quintiles’ perspective, the contract-sales business is a small and non-core piece of the $19.8 billion-market-cap company.

A Goldman representative declined to comment. Those with Quintiles and UDG didn’t immediately return requests for comment.

Action Item: For more detail on the contract-sales business: www.quintiles.com/services/contract-sales

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