Dublin-Based ICON to Acquire Rival CRO for a Whopping $12 Billion

On February 24th, ICON plc, a Dublin-based CRO, announced it has entered into a definitive agreement to acquire PRA Health Sciences, Inc. Under the terms, the acquisition will be in both cash and stock transaction for a total of $12 billion. The cash portion of the deal will be partially funded through committed debt financing from Citi bank, the financial advisor for ICON in this deal.

As compensation for PRA shareholders, each will receive $80 in cash and 0.4125 shares of ICON stock per share of PRA that they owned. This compensation structure represents an approximately 30% premium to PRA’s closing price ($127.73) as of February 23rd, 2021. As a result of this transaction, PRA shareholders will own approximately 34 percent of the shares of the combined company as opposed to the 66 percent held by original ICON shareholders. Cahill Gordon & Reindel are serving as legal counsel to ICON.

“From a shareholder perspective, the transaction is anticipated to be highly accretive, delivering double-digit accretion in the first full year and growing to 20% plus thereafter. This will be driven by growth momentum, estimated annual cost synergies of $150 million, and a combined effective tax rate decreasing to 14%, both to be realized in approximately 4 years,” said Steven A. Cutler, CEO of ICON plc, in an earnings conference call.

New Company Structure

Steve described the new company would be capable of producing a “new paradigm for accelerating clinical research and bringing new medicines and devices to market.” He will serve as the CEO of the new firm, which will also be based out of Dublin, while Brendan Brennan, Chief Financial Officer of ICON, will serve as its CFO. Ciaran Murray will serve as the Chairman of the Board of Directors.

Technological Advantages

Biopharma and medical device customers of all sizes will benefit from the broader service offerings of a combined new firm owing to the geographical footprint, deeper therapeutic expertise, expansive healthcare technology innovation, and functional talent and capabilities. PRA’s mobile and connected health platforms and real-world data and information solutions together with ICON’s Accellacare site network, home health services, and wearables expertise will be combined to deliver differentiated decentralized and hybrid trial solutions to meet growing customer needs.

Especially, PRA’s mobile platform and interconnected health system were met with a lot of enthusiasm by officials in the ICON company. “We’re seeing unprecedented … interest in our offering on the decentralized trial … even in areas like oncology, where you wouldn’t naturally think there’s a decentralized trial opportunity,” said Steve Butler.

They intend to make great use of this decentralized platform to connect both medical professionals and patients as well as continue its use for clinical trials. Despite this technology’s potential, the stock price of PRA was erratic for most of last year. However, shareholders would welcome the financial gain from this merger and hope for the new firm’s success. With Icon and PRA merging, the combined firm will be able to take advantage of a post COVID, pandemic concerned world by digitizing and distancing traditional medical activities. This strong technology and the solid performance history of Icon bodes well for the combined company.

Related Article: Roivant Inks $450 Million Worth Drug Discovery Deal with Silicon Therapeutics

References

1. https://www.iconplc.com/news-events/press-releases/icon-to-acquire-pra-health-sciences/
2. https://investor.iconplc.com/node/14886/pdf

Author

Eduardo Longoria