Wobbly Parexel International snapped up for $5B in latest CRO buyout

Josef von Reichenbach, CEO, Parexel

The big CRO shakeup continues this morning with news of Pamplona Capital’s $5 billion acquisition of Parexel International, one of the biggest players in the business.

Pamplona said this morning that it has forged a deal to acquire the contract research outfit for $88.10 a share. That’s 28% higher than the price of Parexel shares $PRXL on May 5, the day before the first market rumors of a buyout began to circulate.

Parexel shares surged 5% as the news hit Tuesday.

The deal follows months of brewing dissatisfaction among Parexel’s investors, who have been unhappy with the CRO’s recent financial performance compared to its rivals. The company, which has 19,600 staffers worldwide, triggered a reorganization recently as it sought to right the ship.

In a filing with the SEC on May 4, the Waltham, MA-based company outlined plans to slash up to 1,200 jobs — far more than the 400 job cuts that had been in the works. And some have targeted management with their critiques, indicating that some big changes could still be ahead at the CRO.

There’s nothing new about a CRO buyout, though. The industry has been consolidating for years now with the help of billions of private equity dollars. INC and inVentiv announced a major merger recently while AMRI was bought out by The Carlyle Group and GTCR earlier this month.

Parexel CEO Josef von Rickenbach had this to say:

Parexel benefits from a strong operating foundation with expertise and resources to support our clients in their clinical trials around the world. However, as our results over the past year show, the market for biopharmaceutical services is evolving. We believe the more flexible corporate structure afforded by this transaction will better position us to advance Parexel’s strategy in light of these realities and to shape the Company to best capitalize on our exciting market opportunities.

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