Dublin-based healthcare services provider UDG has agreed to be acquired for £2.6 billion (€3.15 billion) by a US private equity giant where the Irish company’s former chief executive, Liam FitzGerald, is a deals adviser.
New York-based Clayton, Dubilier & Rice (CD&R) will pay £10.23 in cash per share in UDG, a premium of 21.5 per cent the company's closing price on Tuesday in London, UDG said on Wednesday.
"We believe that this is an attractive offer for UDG shareholders, which secures the delivery of future value for shareholders in cash today," UDG chairman Shane Cooke said.
Established in 1948 in Ballina, Co Mayo, as United Drug Chemical Company, a co-operative controlled by a group of pharmacists to secure a reliable supply of medicines, the company has long shed its roots and generated less than 0.4 per cent of its $1.15 billion (€950 million) total sales in the Republic last year.
The company floated on the stock market in 1989 but abandoned its Irish listing in 2012 for a primary quotation on the London Stock Exchange.
The business went through a transformational year in 2016 when it sold its legacy Irish wholesale business and UK-based travel healthcare operation, for €407.5 million.
UDG is now concentrated on two businesses: Ashfield, which provides major drugmakers with outsourced services such as sales reps and healthcare communications; and Sharp Packaging, a provider of outsourced healthcare packaging in an increasingly regulated field for drug serialisation.
Mr FitzGerald presided over much of UDG’s evolution and international expansion as chief executive between 2000 and 2016, overseeing 30 acquisitions during his time. CD&R hired him in 2017 as an adviser to help drive healthcare investments.
UDG, which remains headquartered in Citywest Business Campus in west Dublin and is led by chief executive Brendan McAtamney, employs around 9,000 people in 29 countries.
The takeover deal is subject to shareholder and High Court approval as well as clearance from competition authorities in Austria, Germany, Russia and the United States.
CD&R, founded in 1978, has offices in New York and London, has been very active in recent years in deals across the pharmaceutical services, healthcare services and medical technologies sectors.
Last year, CD&R took over UK healthcare marketing and services company Huntsworth and installed Mr FitzGerald as its chairman before it went on to buy medical communications company Nucleus Global.
The US private equity giant said that it plans to combine Ashfield and Huntsworth. It also plans to invest further in UDG’s Sharp division “to support its growth prospects and service innovation”.
CD&R said it plans to enter talks with UDG management on an executive incentive plan when the deal is completed. If the takeover falls through, the US firm may receive as much as £26 million under an expenses reimbursement agreement.
“ The diverse nature of UDG’s business, UDG board approval and the knowledge that principals within Clayton, Dubilier & Rice would have of UDG would suggest to us that the offer is likely to complete,” said Goodbody Stockbrokers analyst Gerry Hennigan.
UDG’s main financial advisers on the deal were Goldman Sachs and Rothschild, with Davy, a long-standing corporate broker to the business, given third billing. Citigroup advised CD&R.