Private equity firm KKR to acquire Raleigh pharmaceutical services company PRA

dranii@newsobserver.comJune 24, 2013 

Pharmaceutical services company PRA International, which was looking at going public, is instead being acquired by giant private equity firm Kohlberg Kravis Roberts.

Genstar Capital, the San Francisco private equity firm that bought Raleigh-based PRA for $797 million in 2007, announced Monday that it has reached a definitive agreement to sell the business to KKR. Financial details weren’t disclosed, but several news outlets including The New York Times, Bloomberg News and Reuters reported that the sale price is $1.3 billion.

Colin Shannon, PRA’s president and CEO, said in a phone interview that the company anticipates adding at least 200 employees companywide by the end of the year and that the sale won’t trigger any layoffs.

“This is a growth story,” he said. “Having KKR as a partner will accelerate our growth” thanks to its deep pockets.

KKR, which manages $78.3 billion in assets, was founded in 1976 and is led by billionaires Henry Kravis and George Roberts.

Shannon also said that PRA, which today has about 450 employees in Raleigh and more than 5,300 worldwide, has been enjoying double-digit revenue growth.

KKR spokeswoman Kristi Huller said in an email that the management team led by Shannon “is part of the reason we are investing in PRA International” and will remain intact.

“We are focused on supporting management in doing what they have been doing, growing the company and expanding its international footprint,” Huller also wrote.

Shannon said that the KKR deal represents “a significant opportunity” for PRA employees. “With growth comes the opportunity for career options.”

PRA is among the eight largest contract research organizations, or CROs, that help pharmaceutical and biotechnology companies test experimental drugs. The Triangle is the epicenter of the CRO industry, with more companies employing more workers than anywhere else.

The local CRO talent pool attracted PRA, which moved its headquarters to Raleigh from Virginia in 2008.

CROs have become attractive to investors because of two converging trends: Drug companies are seeking to save money by outsourcing more of their clinical trial work at the same time that they are boosting their spending on research and development.

Jefferies Research estimates that CROs generated $24.3 billion in revenue in 2012 and projects that industry receipts will rise 6 percent this year.

The industry’s upbeat prospects enabled Durham-based Quintiles, the world’s largest CRO, to raise nearly $950 million last month with an initial public offering of stock, or IPO.

Last month PRA announced that it had made a confidential filing with the Securities and Exchange Commission for a possible IPO. Choosing to announce its confidential filing, which companies aren’t required to do, raised questions about whether Genstar was seeking to flush out a buyer for the business.

Genstar reportedly sought to sell the business for $1 billion two years ago, but a deal failed to materialize.

KKR’s acquisition of PRA is expected to close in the third quarter.

Ranii: 919-829-4877

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