March 28, 2017 / 9:52 PM / 5 months ago

Exclusive: PPD's private equity owners in talks to sell stakes - sources

(Reuters) - The two buyout firms that own Pharmaceutical Product Development LLC (PPD) are in advanced talks to sell some of their stakes in the U.S. clinical trials firm at a price that would value the entire company at more than $9 billion, including debt, people familiar with the matter said.

The deal would see PPD's owners, Carlyle Group LP (CG.O) and Hellman & Friedman LLC, continue to control the company jointly, the people said. Carlyle currently owns 60 percent of PPD and Hellman & Friedman owns 40 percent, with the two sharing governance rights.

Carlyle and Hellman & Friedman are in talks to sell minority stakes in PPD to investors that include Singapore's sovereign wealth fund GIC and Abu Dhabi Investment Authority, the people said on Tuesday.

Carlyle and Hellman & Friedman would continue to collectively own more than half the company, the people added.

The exact deal structure is still being hammered out, and negotiations are expected to continue for much of April, with no certainty that a deal will be reached, the people added.

An alternative deal is still possible. Carlyle and Hellman & Friedman considered an offer for the entirety of PPD earlier this month from private equity firm Pamplona Capital Management LP, which had financial backing from investment firm LetterOne Holdings SA, the people said.

However, Pamplona's offer did not value PPD as highly as the minority equity investors, according to the sources.

The sources asked not to be identified because the negotiations are confidential. Carlyle and Hellman & Friedman declined to comment, while PPD, GIC, Abu Dhabi Investment Authority, Pamplona and LetterOne did not immediately respond to requests for comment.

A deal for PPD would underscore how the contract research organization industry has benefited in recent years from the pharmaceutical companies' drive to cut costs, reduce clinical trial times and expand their research and development presence around the world.

The transaction would also highlight the value of PPD's significant scale in what is otherwise a fragmented industry.

Based in Wilmington, North Carolina, PPD offers its services to biotech, pharmaceutical and medical device companies that wish to outsource research services. It focuses its research on a wide range of therapeutic areas, ranging from cardiovascular to urology.

Carlyle and Hellman & Friedman took PPD private in 2011 for $3.9 billion. Under their ownership, PPD's 12-month earnings before interest, taxes, depreciation and amortization of $340 million have more than doubled.

Laboratory Corporation of America Holdings (LH.N) explored an acquisition of PPD earlier this year, Reuters reported in February.

Reporting by Carl O' Donnell and Greg Roumeliotis in New York; Editing by Andrew Hay

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