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Shares of Syneos rose 8.8% before the bell.
Syneos said the consortium will pay about $43 per share in cash, which represents a premium of about 12% to the company’s last close of $38.45. The acquisition is valued at $7.1 billion including debt.
North Carolina-based Syneos has been facing challenges in winning new business, as many of its clients, which include small and medium-sized biotech companies, have cut spending amid difficulties raising funding in a post-COVID-19 market downturn.
Other companies which offer contract research services, such as Danaher Corp (NYSE:DHR) and Thermo Fisher Scientific (NYSE:TMO), have also flagged soft demand in the sector as biotech clients face a funding crunch.
Private-equity firms have increasingly been investing in the drug development sector, which was deemed as risky, by coming up with deals that compensate them for the uncertainty involved.
The deal comes days after a private-equity group including Warburg Pincus and Advent International agreed to buy Baxter International (NYSE:BAX)’s biopharma solutions unit for $4.25 billion.
Syneos, which helps pharmaceutical companies with clinical trials and marketing their drugs, currently carries a debt of nearly $3 billion.
The company reported a total backlog of contracts of $9.83 billion, as of March 31, 2023, down from $11.63 billion at the end of the first quarter of 2022.
The deal is expected to close in the second half of 2023.
