Burlington, North Carolina-based LabCorp is rumored to be negotiating an $8 billion acquisition of Pharmaceutical Product Development (PPD), a global contract research organization operating in over 50 countries.
Reuters broke the story on Saturday, citing anonymous sources involved in the confidential talks. The $8 billion figure would include the purchase of debt. PPD was bought by two private equity firms, Carlyle and Hellman & Friedman, for $3.9 billion in 2011.
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In an emailed statement, a LabCorp spokesperson said the company does not comment on market rumors.
It’s not the first time M&A negotiations have been leaked. In April 2016, Bloomberg reported that LabCorp was in talks to acquire INC Research, a CRO focused on clinical trial development. The negotiations were said to be early stage and no deal materialized.
It does, however, seem to confirm LabCorp’s intent to acquire another large contract research organization, following its 2014 acquisition of Covance for $6.1 billion. The deal was designed to expand LabCorp’s technology reach in areas including patient recruitment for clinical trials and the rapid delivery of trial data to relevant stakeholders.
Acquisition rumors have also followed PPD for some time. The Wall St Journal reported in December 2016 that the company was up for sale for $5 billion — or as much as $9 billion with debt included. The company had reportedly hired Goldman Sachs, JP Morgan Chase and Centerview Partners to finalize a deal.
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Based in Wilmington, North Carolina, PPD provides a wide range of discovery, development and post-approval services as well as compound partnering programs. Along with its biopharma clients and partners, the CRO also works with medical device companies and academic and government organizations. The company boasts 46 offices and 17,000 employees worldwide.
LabCorp has 50,000 employees worldwide and generated revenues of $8.5 billion in 2015. It performs diagnostic tests for physician offices, hospitals, government agencies, managed care organizations and biopharma companies.
In recent years it has finalized over a dozen acquisitions, many of which were negotiated for nine or 10-figure sums. Between 2005-2011, LabCorp acquired Esoterix, USLabs, Litholink, Tandem Laboratories, Monogram BioSciences, Orchid Cellmark and Genzyme’s genetic testing business, which sold for $925 million in 2010.
The most recent deal came in July 2016, when LabCorp acquired San Diego, California-based Sequenom for $371 million. As of Monday, its market capitalization was $14.18 billion.
Photo: kgtoh, Big Stock
