Avista Capital Partners is exiting its four-year-old investment in biopharmaceutical testing company BioReliance Holdings Inc., via a sale to Sigma-Aldrich Corp. for $350 million in cash.
The sale price would allow New York-based Avista to book about a 3.5 times return on its equity. This is based on the existing $155 million debt that, according to Standard & Poor’s Leveraged Commentary & Data, BioReliance assumed when Avista purchased it from Invitrogen Corp. for $210 million in February 2007.St. Louis-based Sigma-Aldrich, which had $384 million in net income on $2.3 billion in sales of its life sciences manufacturing products, is buying a company that generated $110 million in revenue in 2010. Sigma-Aldrich said it expects the company to show double-digit growth in 2011.
Sigma-Aldrich’s acquisition of BioReliance is expected to be modestly accretive to the company’s diluted earnings per share in 2012, the company said. The buyer is financing the deal, which is expected to close in the first quarter, pending regulatory approval, with existing cash and credit facilities.
BioReliance of Rockville, Md., supplies a range of testing services to pharmaceutical, biotech and other life sciences companies. Companies might contract with BioReliance for manufacturing, for toxicology screenings, for biologic safety tests or for animal health testing, among other services.
Avista hasn’t disclosed much information on BioReliance since 2007, but available details suggest the portfolio company hasn’t experienced substantial growth, or may have gone through some belt-tightening. While it had 700 employees when Avista made the acquisition, BioReliance now has 650. The company maintains primary operations in Glasgow and Stirling, Scotland, and has sales offices in Tokyo and Bangalore, India.
Sigma-Aldrich’s interest in BioReliance doesn’t come as a surprise. Similar contract research organizations, or CROs, which provide broader clinical testing services to life sciences companies, have been the target of M&A deals in recent months. Private equity firms Carlyle Group and Hellman & Friedman LLC are paying about $4 billion, using $2.2 billion in leveraged finance, to buy Wilmington, N.C.-based Pharmaceutical Product Development Inc. In May, Thomas H. Lee Partners LP-backed inVentiv Health Inc. announced it would buy PharmaNet Development Group Inc., another contract research organisation.
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