Quintiles to Borrow Billions, Plays Coy
From News & Observer (Raleigh, NC) (March 9, 2011)
March 09--Quintiles, the world's largest provider of services for the biopharmaceutical industry, plans to take advantage of the improving financial markets by borrowing $2.43 billion.
The money will allow the Durham company to refinance $1.7 billion of existing debt with better terms and raise new capital for various purposes, including possible acquisitions or other deals.
"Current financing terms are attractive, and banks are looking to invest in the right companies," spokesman Phil Bridges said. "We believe Quintiles is seen as a safe bet to execute this type of transaction because we have a strong track record of performance."
Quintiles is benefiting as pharmaceutical and biotechnology companies seek to cut costs and farm out more duties to contract companies. That includes running clinical trials of experimental drugs, selling and marketing new medicines, and more.
With annual sales of nearly $3 billion, Quintiles also is expanding in fast-growing Asian markets. The private company doesn't release detailed financial results.
Big Triangle player
The company employs more than 20,000 people in 60 countries, including 1,400 in the Triangle, making it the largest among a local cluster of drug research firms. Quintiles is hiring, with more than 100 open positions locally, and 600 worldwide.
One area where Quintiles might be interested in making an acquisition is in early-stage drug development, said David Windley, an analyst who follows the contract-research organization industry for Jefferies & Co. That would help Quintiles compete for new contracts with large, publicly traded rivals such as Covance of New Jersey.
"Maybe they buy something they don't have," Windley said. "That would make sense."
But as a large, private competitor, Quintiles "doesn't talk a lot about what they're up to," he added.
It doesn't have to.
Quintiles, founded on the campus of UNC-Chapel Hill in 1982, became publicly traded in 1994. But in 2003, CEO Dennis Gillings grew tired of answering to Wall Street every quarter and led a group of investors that took the company private in a $1.7 billion deal.
Since then, there has been repeated speculation that Gillings might consider making Quintiles publicly traded again.
"I expect it will eventually happen," Windley said. "But they've done a pretty good job of expanding the business to keep their investors happy without going public again."
While Quintiles routinely evaluates its financing options, "there are no plans to return to the public markets at this time," Bridges said. The refinancing doesn't change the company's ownership structure, he added.
Quintiles officials haven't decided what to do with the money, Bridges said. Other potential uses include buying back shares or paying a dividend to its investors.
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Posted: March 2011