Cincinnati-based contract research organization Kendle International (Nasdaq:KNDL) has solved its “acquire-or-be-acquired” dilemma.
Kendle agreed to sell itself to Raleigh, North Carolina-based CRO INC Research for $232 million, according to a statement from the companies. The selling price of $15.25 per share represents a 60.5 percent premium over Kendle’s closing share price on Wednesday.
Kendle’s board of directors has unanimously approved the deal, which is expected to close next quarter.
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“The combination of INC Research and Kendle will enable us to deliver broader capabilities and reach a critical mass for the emerging drug development outsourcing and alliance partnership models,” said James Ogle, CEO of INC Research.
The two companies no doubt figure that a combined entity will be better positioned to compete with bigger CROs like Quintiles, Icon (Nasdaq:ICLR), Covance (NYSE: CVD) and Pharmaceutical Product Development (Nasdaq:PPDI).
The CRO market is expected to flourish, growing up to 50 percent in the next five years, Morningstar equities analyst Lauren Migliore told MedCity News last month. Drugmakers need to replenish their pipelines as many big sellers go off patent, meaning they’ll have to invest significantly in development. Further, CROs often have greater expertise than pharma companies when it comes to developing drugs in certain therapeutic areas and deeper experience in running clinical trials in a wide array of geographies.
Kendle had been stuck in a bit of in-between stage, too small to compete with the big CROs but large enough to have a fairly significant international presence. Analysts have long opined that the company needed to quickly grow either through buying up smaller CROs or being bought itself.
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With today’s announcement, Kendle has made its choice.
