PPD, one of the Triangle's largest drug-research companies, announced this morning that is being acquired by affiliates of two private equity firms, The Carlyle Group and Hellman & Friedman, for $3.9 billion.
PPD is based in Wilmington but has about 1,400 workers in the Triangle. Rumors have been swirling for months that PPD was on the market and that The Carlyle Group was among the frontrunners.
Under the terms of the deal, which was approved by PPD's Board of Directors, The Carlyle Group and Hellman & Friedman are acquiring the outstanding shares of PPD for $33.25 per share. That's a 30 percent premium on where the shares closed Friday.
Bloomberg News had earlier reported that bids for the company were in the range of $33 and $38 a share.
Pharmaceutical Product Development was founded 25 years ago by Fred Eshelman. Eshelman had been running the company since former CEO David Grange retired in May.
PPD's board of directors named Raymond H. Hill CEO and gave him a spot on the board last month.
Eshelman said in a release that the acquisition gives PPD shareholders an "attractive return" while also "ensuring a secure foundation and commitment to investment innovation and excellence for PPD clients and employees as the company builds on its 25-year history of success."
The deal is expected to close in the fourth quarter.
It comes about a month after Washington-based The Carlyle Group, among the largest private equity firms in the world, filed plans to go public.
PPD is part of a group of companies active in the Triangle, along with Quintiles and INC Research, that help pharmaceutical and biotechnology companies research, test and market new medicines. The firms are known as contract research organizations, or CROs.
The CRO industry has taken a hit in recent years as big pharma companies cut costs and focus resources on the most promising experimental drugs. There are also fewer customers, following big drug mergers such as Pfizer's takeover of Wyeth.
But the CRO industry remains attractive long-term, as drug companies continue to outsource clinical testing and other services. Plus, CROs are expanding into emerging markets with big potential for new medicines and are becoming global competitors.
Last year, a private equity firm and a Canadian pension fund acquired Raleigh-based INC Research.
Private equity firm TPG helped Quintiles founder and CEO Dennis Gillings take that company private in 2003.
PPD shares were up more than 25 percent in earlier trading this morning.