Genstar in $790m research lab deal

San Francisco-based Genstar Capital will acquire clinical research organization PRA International in $790 million deal – the largest the firm has announced to date.

Middle market firm Genstar Capital has entered into an agreement to buy clinical research organization PRA International for $790 million (€576 million). Genstar is already a beneficial owner of 12.8 percent of PRA’s outstanding shares; the firm will pay $30.50 per share in cash to acquire the remaining shares, a 13 percent premium over PRA’s closing share price on 24 July.

It is the largest-ever agreed deal for San Francisco-based Genstar, whose fifth fund closed on $1.6 billion – far surpassing its previous, $475 million fund, which closed in October 2004.

McLean, Virginia-based PRA is the largest privately held CRO in the world. PRA has offices on six continents and approximately $250 million in revenues. The company provides services to the pharmaceutical and biotech industries, including the filing regulatory applications and the management of clinical trials.

The deal is expected to close in the fourth quarter of 2007, subject to antitrust regulations. PRA can shop for better offers until 12 September, but is subject to a $7.9 million break-up fee.

A number of other firms have been active in the CRO space in recent weeks. In June, Mumbai-based ICICI Venture acquired Radiant Research for an undisclosed sum. Earlier this month, Behrman Capital made a profitable exit from WIL Research Laboratories, earning 3.4x return after selling the company to an undisclosed buyer for $500 million.

Credit Suisse Securities was financial advisor and Dewey Ballantine was legal advisor to PRA. UBS Investment Bank was financial advisor and Latham & Watkins was legal advisor to Genstar.

Genstar invests in middle market companies in the life sciences, healthcare services, industrial technology, business services and software industries. Its most recent acquisitions include the purchase of International Aluminum Corporation for $228 million, and power transmission company TB Woods’ Corporation for $120 million.