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June 6, 2017

Carlyle Group, GTCR to Acquire AMRI

  • Albany Molecular Research (AMRI) said today it has agreed to be acquired by affiliates of The Carlyle Group and GTCR for about $922 million cash in a deal that continues consolidation among contract development and manufacturing organizations (CDMOs).

    Founded in 1991, AMRI is a global contract research and manufacturing organization offering services across the drug development pathway, from target discovery and lead optimization through formulation development and sterile fill/finish.

    In recent years, AMRI has expanded through acquisitions. Last year, AMRI bought Prime European Therapeuticals (Euticals), an active pharmaceuticals ingredients (API) manufacturer, for approximately $358 million. And in 2015, AMRI acquired Gadea Pharmaceutical Group for $174 million, in a deal intended to expand the buyer’s portfolio of APIs, as well as its presence outside the U.S. 

    “This transaction is a strong endorsement of our strategy,” AMRI president and CEO William S. Marth said in a statement. “Given their deep healthcare industry expertise and financial resources, Carlyle and GTCR are highly attractive partners for us and offer a compelling opportunity to accelerate our growth and enhance delivery of world-class solutions to our customers.”

    The biggest consolidation deal among CDMOs was announced last month, when Thermo Fisher Scientific said it planned to acquire Patheon for approximately $7.2 billion from affiliates of JLL Partners and Royal DSM.  However, an even bigger deal may be brewing, as speculation emerged earlier this year that LabCorp was in talks to acquire Pharmaceutical Product Development (PPD) for more than $8 billion

    Carlyle Group and GTCR plan to spend $21.75 per share—a 42% premium above the 60-day weighted average closing stock price leading up to April 5, the last trading day before news reports that AMRI was in acquisition talks.

    The buyers plan to finance their acquisition through a combination of debt and equity financing. AMRI said equity capital for Carlyle's investment will come from its $13 billion buyout fund Carlyle Partners VI, L.P., while equity capital for GTCR's investment will come from GTCR Fund XI, a buyout fund with $3.85 billion of limited partner capital commitments.

    The deal is subject to customary closing conditions that include the expiration of the waiting period under the Hart–Scott–Rodino Antitrust Improvements Act of 1976 and similar laws outside the U.S., as well as approval by a majority of AMRI shareholders.

    AMRI said it anticipated holding a special meeting of shareholders to vote on the transaction in the third quarter of this year. AMRI’s board has unanimously approved the deal and recommended that shareholders vote in favor of it.

    Investors responded to the announcement by sending shares up nearly 9% or $1.74 in premarket trading, to $21.51 as of 9:28 a.m. Shares closed yesterday at $19.77, down about 2% or 40 cents from the previous close.

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