Parexel International Corp., one of the largest companies performing contract research and managing clinical trials for drug makers, said Tuesday that it agreed to be acquired by private equity firm Pamplona Capital Management LLP in a $5 billion deal.
The $88.10 per share price represents a nearly 28 percent premium over the Waltham company’s $68.86 stock close on May 5, the day before market speculation about a Parexel takeover sparked a run-up in its shares. Parexel’s stock climbed 3.7 percent Tuesday to $87.04.
Under pressure from an activist investor, Parexel’s board had undertaken a comprehensive review of its options, chief executive Josef von Rickenbach said in a statement. The process led the board to solicit bids for the contract research organization, which also provides consulting and a range of other services for biopharma and medical technology companies.
Parexel’s move was also prompted in part by consolidation in the contract research field and changes in the types of clinical trials run by global drug developers.
“The market for biopharmaceutical services is evolving,’’ von Rickenbach said in the statement. “We believe the more flexible corporate structure afforded by this transaction will better position us to advance Parexel’s strategy in light of these realities.’’
One factor influencing outsourcing firms to combine forces is the growing clamor about high prescription drug prices, which could eventually reduce how much drug makers can charge for their therapies. That, in turn, could lead to cost-cutting in the industry.
“Parexel is the latest example of what appears to be a trend of increased consolidation in the pharma outsourcing space,’’ analyst John Kreger, at financial firm William Blair & Co., wrote in a note to investors Tuesday. “We would not be surprised to see further deals in the coming months given what appears to be a growing interest in gaining further scale.’’
Leading the charge for a company reassessment was New York hedge fund Starboard Value, an aggressive investor that last month said it had taken a 5.7 percent stake in Parexel. The firm began pushing for higher profits and a potential sale, The Wall Street Journal reported.
Representatives of Parexel and Pamplona declined requests to discuss their deal. Starboard executives didn’t respond to a request for an interview.
Parexel had been cutting costs aggressively prior to the purchase, disclosing in May plans to eliminate more than 1,000 positions of its 19,600 jobs worldwide. The company has about 1,450 employees in Massachusetts.
Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.
