Pharmaceutical Product Development agrees to be bought for $3.9 billion

Layers of pharmaceutical companies operate below the level of the famous firms that pitch pills on TV. One big, unheard-of-by-the-masses operation - Pharmaceutical Product Development Inc. - agreed on Monday to be bought for $3.9 billion by private equity funds run by the Carlyle Group and Hellman & Friedman.PPD is a clinical research organization, meaning it does research but also conducts clinical trials of pharmaceutical products for other drug and medical device companies. In recent years, better-known drug companies have outsourced more work to companies like PPD. The company has 11,000 employees in 44 countries on six continents, including about 350 in three Philadelphia-area facilities - Wayne and Blue Bell in the Pennsylvania suburbs and Hamilton, N.J., near Trenton.The proposed deal would pay $33.25 in cash per share for all outstanding shares, representing a 29.6 percent premium over PPD's Friday closing price. The shares closed Monday at $32.28, up $6.62 or 25.80 percent from Friday.The company, whose headquarters is in Wilmington, N.C., has 30 days to solicit or listen to competing offers. The private-equity buyers can match any offer PPD receives. The board of directors recommended accepting the offer, under which PPD would become a private company."The sale of PPD to the Carlyle Group and Hellman & Friedman provides an attractive return for our shareholders, while also ensuring a secure foundation and commitment to investment, innovation, and excellence for PPD clients and employees as the company builds on its 25-year history of success," Fred Eshelman, founder and executive chairman of PPD, said in a statement.The statement says financing consists of a combination of equity provided by Carlyle Partners V L.P., a $13.7 billion U.S. investment fund, and Hellman & Friedman Capital Partners VII L.P., an $8.9 billion fund, with external debt financing to be provided by Credit Suisse, JP Morgan, Goldman Sachs, and UBS.The PPD 2010 annual report said it owned six buildings, including a 146,000-square-foot facility in Wayne. That facility includes a unit that works on vaccines and biologics, meaning drugs produced from living cells rather than from chemicals. There was no word Monday on whether the proposed sale would mean layoffs. One of the more recent hires was chief executive officer Raymond Hill, who joined the company and board of directors Sept. 16 after working for the IMS Consulting Group."Nothing will change in our day-to-day operations, and our management team is working closely together to ensure the company remains focused on our current objectives and strategy," a PPD spokeswoman said.