Parexel, a top 10 global contract research organization (CRO), announced an agreement on June 13 to acquire UK clinical technology company ClinPhone at an 86% premium to its share price on the London Stock Exchange. The deal values ClinPhone’s shares at $182 million. Soon after the Parexel press release hit the wires, Quintiles, the market leading private CRO, said it is planning an all-cash bid for ClinPhone that would beat Parexel’s $182 million offer.
“Quintiles believes that the operations of ClinPhone are a strategic fit with Quintiles’ clinical research capabilities and confirms that it has been in discussions with the board of ClinPhone, which may or may not lead to an offer,” Quintiles said in a statement.
Earlier, in a statement, Josef von Rickenbach, chairman and chief executive officer of Parexel, said: “The combination of complementary capabilities of Parexel and ClinPhone would provide clients with a more comprehensive suite of clinical information technologies.”
According to Jill Baker, vice president of investor relations at Parexel, Quintiles has not made an official offer and ClinPhone’s board unanimously recommended Parexel’s bid.
"They have made what is called a holding announcement, which is common in the UK. But at this point, our offer is the only firm offer that has been made to the company," Baker told CenterWatch.
In February 2008, Parexel made an initial bid for ClinPhone. Although financial details were not disclosed, ClinPhone considered the offer too low.
ClinPhone has about 730 employees. Parexel had 2007 revenues of more than $900 million and about 5,600 employees. ClinPhone would fit with well Parexel’s technology subsidiary Perceptive Informatics and would give it an electronic data capture (EDC) system.
“If the acquisition goes through, [ClinPhone] would become part of Perceptive," said Baker.
Parexel launched Perceptive Informatics in 2000 and has since grown the subsidiary considerably with offerings including clinical trial imaging services and a growing technology integration consulting unit.
"If you look back at that time, many of our competitors established technology subsidiaries as well, but pretty much without exception, they've all been shut down or were folded into other operations. Ours has remained a separate business because we felt that it was very important to highlight that area and not just let it become part of operations," added Baker.
She added that ClinPhone's solutions could be stand alone products as well as an in-house eClinical platform for the company’s contract research projects in a way similar to its Perceptive Informatics' products.
"We think it is very important to provide flexibility to our clients, so we will continue to provide full program as well as stand alone [services]. And we actually offer our technology to other CROs, so they are in our client mix in that business as well," she said.
Already a leading player in its sector, ClinPhone became much more than an interactive voice response and interactive web response (IVR/IWR) company in March 2008, when it launched a combination EDC product to help its clients eliminate costs associated with integrating such technologies separately. The EDC component was DataLabs—the company’s EDC solution obtained through the acquisition of that company in late 2006—combined with its IVR/IWR solutions for trial management and electronic patient reported outcomes (ePRO) needs.
Parexel’s potential acquisition of the company is based on the offer price of 135 pence in cash for each ClinPhone share. The offer price represents a premium of 86% to the ClinPhone share price on the London Stock Exchange of 72.5 pence on Feb. 14, 2008.
Parexel has arranged a $300 million credit facility with JPMorgan Chase Bank, N.A. and Keybank National Association. Parexel expects that the acquisition will be dilutive to earnings in its financial year ending June 30, 2009.
In morning trading June 13, Parexel’s shares were off slightly—under 1%.