THL Partners to Buy inVentiv for $1.1 Billion

VTIV agrees to $1.1 billion buyout by THL Partners
VTIV agrees to $1.1 billion buyout by THL Partners

Thomas H. Lee Partners is hungry for deals. The firm recently tried to buy CKE Restaurants (CKR), but lost out to Apollo. This week, however, the private equity succeeded with a $1.1 billion bid for inVentiv Health (VTIV), a top provider of outsourced services to the pharmaceutical industry.

The deal comes to $26 per share and is expected to close in the third quarter. The financing is also fully committed.

Comprehensive Service Platform

inVentiv is a unique company, with various segments that help clients with sales, advertising and communications, strategic consulting and even clinical trials. Often, the focus is on helping improve revenues, which is certainly attractive in a market where pharma companies are facing lighter drug pipelines and tighter budgets.

inVentiv's customer base is fairly diverse and includes over 350 client relationships that cover more than 800 brands. In fact, inVentiv has contracts with the top 20 global pharma companies.

In terms of finances, inVentiv has stable revenues and strong cash-flow generation. Such characteristics definitely make it easier to pull off a buyout transaction.

Promising Future

The market for outsourced health care services is roughly $35 billion per year. And for the most part, inVentiv provides an integrated solution. This certainly is attractive to clients and also provides for lucrative cross-selling opportunities.

inVentiv reported its first-quarter results Thursday, showing a 9% increase in EBITDA to $30.4 million. Revenues increased by 5% to $269.4 million. However, on the news of the buyout, shares of inVentiv are up only 5% to $25.18. But keep in mind that the company announced it was approached for a buyout in late March, and since then has talked to various possible suitors. In other words, the deal has been vetted extensively and it is unlikely the bid will be increased.