(Reuters) - Contract drug manufacturer and research company Albany Molecular Research Inc (AMRI.O) said on Tuesday it had agreed to be taken private by buyout firms Carlyle Group LP (CG.O) and GTCR LLC for about $922 million in cash.
The deal comes amid consolidation in the contract research services industry, which has benefited in recent years from pharmaceutical companies' drive to cut costs, reduce clinical trial durations and expand their research and development presence globally.
Albany Molecular offers a range of contract services for life sciences companies, from discovering new drugs to manufacturing products and active ingredients. Clinical research organizations can prove to be lucrative investments for private equity firms.
The company's stockholders will get $21.75 for each share they hold, representing a premium of about 10 percent to the stock's Monday close.
The offer represents a premium of about 61 percent since April 7, when Dealreporter reported that the company was exploring a sale.
The company wanted to refinance its balance sheet this year after its $358 million acquisition of Therapeutics SpA, also known as Euticals, William Blair analyst John Kreger wrote in a client note.
"...a go-private transaction was the best way to clean up the balance sheet, gain greater flexibility to pursue additional deals, and more aggressively integrate operations without having to report earnings quarterly," Kreger said.
Shares of the Albany, New York-headquartered company, which had already risen close to 50 percent since speculation about the deal broke, shot up about 9 percent to $21.52 in afternoon trading on Tuesday. Shares of Carlyle Group fell as much as 2 percent to $17.20.
Albany Molecular will pay $35 million if it terminates the deal for a superior proposal or fails to obtain the minimum required stockholder approval for the transaction, according to a regulatory filing. (bit.ly/2szmueB)
In case Carlyle and GTCR terminate the deal, they will have to pay Albany Molecular a termination fee of $70 million, according to the filing.
Carlyle and GTCR will use debt and equity financing to fund the deal, Albany Molecular said.
Credit Suisse was Albany Molecular's financial adviser. Barclays and Morgan Stanley advised Carlyle, while RBC Capital Markets advised GTCR.
Reuters had reported on Monday that GTCR and Carlyle were in talks to team up and buy Albany Molecular Research.
Reporting by Divya Grover in Bengaluru; Editing by Sai Sachin Ravikumar and Shounak Dasgupta