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Private equity group swoops on pharma services provider UDG Healthcare

Private equity group swoops on pharma services provider UDG Healthcare with a £2.6bn bid

Private equity buyers have swooped on pharmaceuticals services provider UDG Healthcare with a £2.6billion bid.

The London-listed firm urged shareholders to back the cash offer from Clayton, Dubilier & Rice (CD&R), which is worth 1023p per share. That is a 21.5 per cent premium on UDG’s closing price on Tuesday.

It is the latest British company to fall into private equity hands after a string of deals, including approaches which were made for John Laing and St Modwen last week.

Pharmaceuticals services provider UDG Healthcare has urged shareholders to back a £2.6bn cash offer from private equity group Clayton, Dubilier & Rice

Analysts say the bonanza is being fuelled by a perception that UK firms appear ‘cheap’, due to the weak pound and the knock to share prices in the pandemic.

UDG’s shares leapt more than 20 per cent in response to the takeover bid.

They closed up 20.7 per cent, or 174p, at 1016p.

Shane Cooke, chairman of Dublin-based UDG, insisted the board was ‘confident’ in its future prospects but that the takeover bid was ‘an attractive offer for shareholders’.

‘The offer reflects the quality, strength and long-term performance of UDG’s businesses and its future growth potential,’ he added.

‘We believe that our people, our clients and our businesses will continue to prosper under the stewardship of CD&R.’

Eric Rouzier, partner at CD&R, said: ‘UDG has long established itself as a leading provider of high-value services to pharma and biotech companies globally, supported by a highly skilled workforce.’

UDG, which has its headquarters in Dublin, specialises in healthcare advisory, communications, commercial, clinical and packaging services.

Its manufacturing services include making placebos used in clinical trials.

However, the offer premium of 21.5 per cent is lower than the average of 36 per cent that has been offered in a string of other recent deals, according to AJ Bell.

Russ Mould, AJ Bell’s investment director, said that the avalanche of bids ‘suggests that someone, somewhere feels UK companies are still going cheap’.

He said overseas buyers were attracted by the weak pound, which still sits below levels reached ahead of the EU referendum in 2016, giving them improved buying power.

UDG also reported for the six months the end of March, showing that revenues fell 5 per cent to £469million but profits rose 5 per cent to £46million.