10 minute read
PPD’s BIG DEAL
PHOTO BY SUZI DRAKE A pharma evolution
PPD GROWS FROM SMALL BUSINESS INTO $17.4B DEAL
BY SCOTT NUNN
PPD OPENED FOR BUSINESS IN 1985 WITH ONE EMPLOYEE – COMPANY FOUNDER FRED ESHELMAN, A PHARMACIST WITH A BIG VISION. WHEN THE CARLYLE GROUP BOUGHT THE FIRM IN A $3.9 BILLION DEAL IN 2011, PPD WAS OPERATING IN 33 COUNTRIES AND EMPLOYED 10,000 WORKERS.
The company’s success not only solidified Wilmington’s reputation as a hub for contract research firms, but its shiny, modern 12-story headquarters was a vital part of the transformation of the northern riverfront area.
Now with 26,000 employees (including 1,800 locally), the homegrown company is about to become part of something even bigger, after the announcement in April that it would be purchased by Thermo Fisher Scientific (TFS). Massachusetts-based TFS has 80,000 employees and supplies a host of products, equipment and services to health care and life-sciences organizations.
While TFS sells lab equipment and is involved in drug manufacturing, PPD strictly provides
services. Industry observers said the deal provides a missing part of the puzzle for TFS’s product development.
THE COMPANIES
On a contract basis, the Wilmington-based firm provides research and other
services to pharmaceutical and biotechnology companies. PPD recruits patients and clinical trial investigators, manages clinical trial sites and provides services supporting a drug as it approaches regulatory approval and after it reaches the market.
It also offers laboratory services, which make up about a fifth of its revenue. PPD’s $4.7 billion in revenue last year made it one of the largest companies in the contract research sector, a $50 billion industry.
In 2017, PPD closed on a recapitalization deal and added two new investors in addition to The Carlyle Group and Hellman & Friedman. The investment with a subsidiary of the Abu Dhabi Investment Authority and an affiliate of GIC, Singapore’s sovereign wealth fund valued PPD at the time at more than $9 billion.
PPD made an initial public offering in February 2020 and began trading on the Nasdaq. Its market capitalization on June 3 was $16.25 billion. David Simmons has been PPD’s chairman and chief executive officer since 2012.
Based in Waltham, Massachusetts, TFS provides a broad range of
products and services through a large number of brands, such as Applied Biosystems, Invitrogen, Fisher Scientific and Patheon. Whereas PPD provides only services, TFS sells actual products, such as complex instruments and chemicals used in research. In 2020, about 20% of the company’s $32 billion in revenue came from services. The company, however, has recently become more involved in providing services to its customers. TFS trades on the N.Y. Stock Exchange and on June 3 had a market capitalization of $176.55 billion. Marc Casper is president and CEO.
THE BIG DEAL
It was announced April 15 that the board of directors of both companies had approved a definitive agreement under which TFS will acquire PPD for $47.50 per share, a total cash price of $17.4 billion. TFS will assume $3.5 billion of net debt with the purchase.
According to a news release from the companies issued the day the deal was announced, the price “represents a premium of approximately 24% to the unaffected closing price of PPD’s common stock on the Nasdaq as of Tuesday, April 13, 2021, or 32% to the 60-day VWAP inclusive of that date.”
“Pharma and Biotech is our largest and fastest growing end market, and our customers value us as a strategic partner and an industry leader,” Casper said. “The acquisition of PPD is a natural extension for Thermo Fisher.”
The news release said that Thermo Fisher’s access to key decision-makers in the industry will increase opportunities for PPD to win additional work.
“No further action by other PPD shareholders is required to approve the transaction,” the statement said.
Thermo Fisher will use debt financing and cash on hand to complete the transaction.
Barclays Capital and Morgan Stanley & Co. are serving as financial advisers to Thermo Fisher on the deal. Cravath, Swaine & Moore and Arnold & Porter Kaye Scholer are serving as legal counsel. 1986
Eshelman relocates operations to
Wilmington.
1989
PPD
incorporates in North Carolina.
2007
Newly constructed
12-story world headquarters
along Cape Fear River in the northern end of downtown Wilmington
2012
David Simmons
becomes chairman and CEO.
2017
Hellman & Friedman and affiliates of The Carlyle Group enter into definitive agreements to
recapitalize PPD and expand the company’s
ownership to include two new investors.
APRIL 2021
Thermo Fisher Scientific
announces plans to acquire PPD (deal expected to close at the end of this year).
1980s
1985
Fred Eshelman starts PPD as a one-person consulting firm based in his home in Maryland.
1990s
2000s
1996
PPD issues initial public stock offering and begins trading on Nasdaq.
2005
PPD's board of directors adopts an annual cash dividend policy.
2010s
2011
Acquired by affiliates of The Carlyle Group
and affiliates of Hellman & Friedman in an allcash transaction valued at $3.9 billion, making the firm private. Eshelman is no longer part of the company.
2020s
FEB. 2020
PPD issues
initial public stock offering
and begins trading on Nasdaq.
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For PPD, J.P. Morgan Securities is the financial adviser and Simpson, Thacher & Bartlett are providing legal counsel.
Casper said that, unlike some acquisitions, the purchase of PPD was not about merging two companies to gain efficiencies by reducing the number of employees. Rather, he said, the goal is to accelerate growth.
“One of the things that's different about this type of transaction, for the colleagues that are delivering the workday in and day out of PPD, their job’s going to be exactly as it is today, post-close. There’s not an integration with job changes,” Casper said after the deal was announced.
Testing and development for new and experimental drugs have boomed since the COVID pandemic began, and industry observers see a bright future for companies involved in developing both treatment and preventive products for possible future disease outbreaks.
Thermo Fisher Scientific spokesman Ron O’Brien said that as of June 3 nothing had changed in the deal’s status. “The closing is expected to be completed by the end of 2021 (and is) subject to the satisfaction of customary closing conditions, including the receipt of applicable regulatory approvals.”
WHAT WILL HAPPEN LOCALLY?
When the deal closes PPD will become part of TFS’s Laboratory Products and Services Segment.
TFS officials said they plan to bring on members of PPD’s leadership team but have not responded so far to questions about the status of Wilmington-based employees or its continued presence in the Port City.
The news release announcing the sale said that shareholders holding 60% of PPD common stock already have approved the transaction.
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PHOTO BY MICHAEL CLINE SPENCER Preparing for takeoff: Julie Wilsey, director of the Wilmington International Airport, stands outside the facility where an expansion is set to take place over the next few years to accommodate growth.
ILM’S NEXT FLIGHT PLAN
BY CHRISTINA HALEY O’NEAL
Landing a third carrier and new flights at the Wilmington International Airport triggered unprecedented growth in passenger traffic last year.
The new additions came as the airport embarks on its $60 million expansion that will increase ILM’s ability to handle more travelers in the coming years.
Just over 934,000 passengers flew through the airport in 2018, 12 percent more than the previous year’s record. And that was despite a winter storm last January, a series of flight cancellations in the summer because of PSA Airlines’ technical issues nationwide and major disruption due to Hurricane Florence in September.
Officials are now eyeing a milestone mark this year.
“One million is an exciting number for us,” Airport Director Julie Wilsey said. “As we get closer, or break that 1 million passenger mark, it opens a lot of opportunities for ILM.”
ILM wants to grow the airport but at the same time maintain that small-town, Southern charm that it has been known for, said Gary Broughton, the airport’s deputy director. “Our growth has been well thought out,” he said.
Pushing the airport expansion forward is the biggest focus for ILM officials in 2019, with construction underway over several contracts between now and 2022. The airport is expected to grow from 95,000 square feet to more than 173,000 square feet, based on the most recent designs, and would be able to accommodate an estimated 705,000 outbound passengers a year, when the expansion is complete.
There are times at ILM now when areas of the airport are reaching capacity, Wilsey said.
“We need to get the building expanded so we can support more services and more passengers as the airport grows,” Wilsey said.
And as ILM gains more travelers and more capacity, possibilities open up for the regional airport. That includes employing more people.
Currently, there are about 480 people working there, 50 of whom are ILM staff, Broughton said. ILM will need to hire more help in the future, but just how much help is still being determined, he said.
Airport officials continue in 2019 to market for addi-
See ILM, page 13 WilminGtonBiz
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BRIAN CLARK Russ Lopatka Chip Mahan Jim Morton Pierre Naudé Jose Sartarelli David Simmon NEIL UNDERWOOD Jay Wileman Julie Wilsey THE PARTNERSHIP ADVISORY GROUP Barb Biehner Spence Broadhurst Chris Coudriet John Gizdi Shelbourn Stevens Jason Thompson Steve Anderson Amy Beatty RHONDA BELLAMY Robert Burrus WES CARTER Cody Cress Ken Dull Jeff Ear Brian Eckel Lucien Ellison NATALIE ENGLISH Terry Espy TRASK FAMILY Joe Finley JIM FLECHTNER Charles Foust Anne Gardner JOHNNY GRIFFIN Kim Hufham CHRIS ISENHOUR Velva Jenkins Adam Jones Paul Kamitsuka Mike Kozlosky DAVID MICHAEL TIM MILAM JOHN MONTEITH John Nichols CHAD PAUL Chris Ramm Chris Reid DANE SCALISE Sabrina Sells LINDA THOMPSON Bill Vassar TREY WALLACE CYNTHIA WALSH Donny Williams Lee Williams Chris Babcock Brooke Bloomquist
ANNE BRENNAN Travis Corpening Phil Dattilo Beth & Shane Faulkner Shane Fernando HUNTLEY GARRIOTT Jeff JAMES TODD John Brett Lanier Lisa Leath Ryan Legg CHRIS NEWTON Shaun Olsen DAVID REESER Stan Trofimchuk Karl Ricanek Yousry Sayed Daniel Summers GEORGE TAYLOR Kurt Taylor Craig Wagner Gary Winstead Amy Wright SCOTT ADAMS Patrick Brien LAURA BROGDON-PRIMAVERA Philip Brown Robert Campbell JOE CONWAY Jenna Curry Beth Gaglion Stephanie Lanier MEGAN MULLINS considering NHRMC Tracey and Girard Newkirk Gustavo Rodea Isabela Luján Julie Andrews NATHANAEL CONWAY BEN CURRIN CAROLINE FISHER
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