European private equity outfit Cinven has stepped up to buy the majority of long-rumored target Medpace, trading $915 million for an undisclosed controlling stake in the CRO.
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| Supraj Rajagopalan--Courtesy of Cinven |
Cinven, which lost out in the bidding war that sent PRA to KKR for $1.3 billion last year, is taking Medpace off of CCMP Capital Advisors' hands and picking up a CRO with 1,500 employees across 45 countries. Medpace has long focused on small and mid-size biotech and pharma sponsors, a demographic Cinven said will likely keep outsourcing more and more of its development work. And, with 40% of its operations centered on Europe, Medpace fit in with Cinven's geographic expertise, the company said.
The deal comes amid years of high-dollar consolidation in the CRO world, including KKR's recent three-company buying spree, Carlyle Group and Hellman & Friedman's $3.9 billion acquisition of PPD in 2011, and a $1.1 billion leveraged buyout that took inVentiv Health off the public markets the same year. All that dealmaking has made for a bevy of large CROs competing at the top of the market, Cinven Partner Supraj Rajagopalan said, thus creating a sizable opportunity for a player like Medpace.
"The CRO industry consolidation has created a gap in the market serving the mid-cap pharma and smaller biotech players--where Medpace operates and where we intend to capitalize on organic growth opportunities," Rajagopalan said in a statement.
August Troendle, founder and CEO of the Cincinnati-based Medpace, will stick around once the deal closes, and he and the CRO's management will retain an undisclosed minority stake in the company. Under CCMP's ownership, the Medpace crew held claim to 20% of the CRO, but Cinven isn't disclosing the new split.
CCMP traded $485 million for its majority stake in Medpace in 2011, promptly embarking on an expansion binge that spread the CRO's reach around the globe and boosted its payroll by about 50%. The Cinven deal represents a huge return on investment for CCMP, reflecting both the high-growth nature of the CRO space and private equity's enthusiasm about buying into it.
- read the announcement