Investment firm Genstar Capital Llc will take specialty clinical research company eResearch Technology ERT.O private for $400 million, the latest in a string of private equity deals in the healthcare sector.
Private equity firms have been splurging on healthcare companies since last year, as they bet on rising use of services by aging populations in the United States, Europe and elsewhere.
Genstar Capital will pay $8 a share -- a premium of about 2 percent to eResearch's Monday closing price. The company's shares have doubled since touching a more than three-year low last November.
The deal has the support of Blum Capital, one of eResearch Technology's largest shareholders.
"We believe this transaction represents a fair price," said John Park, a partner at Blum Capital, which holds a 9 percent stake in the company.
eResearch Technology provides biopharmaceutical companies, contract research organizations (CROs) and medical device companies cardiac safety drug research, respiratory research, and helps collect and manage clinical data.
The deal will add to the private equity firm's life sciences portfolio, which includes clinical research organization PRA International and Catalent Pharma Solutions, a division of Cardinal Health (CAH.N).
In one of the largest leveraged buyouts last year, Carlyle Group CYL.UL and Hellman & Friedman bought Pharmaceutical Product Development Inc PPDI.O for $3.9 billion.
Blackstone Group (BX.N) bought Emdeon Inc EM.N for $3 billion and Pfizer Inc (PFE.N) sold its Capsugel unit to KKR & Co (KKR.N) for nearly $2.38 billion.
"eResearch Technology specializes in ECG analysis and respiratory services where it is the market leader ... It has a strong name recognition, and reputation for quality. Those are intangible assets that can be leveraged," said Benchmark Company analyst Raymond Myers.
The Philadelphia, Pennsylvania-based eResearch Technology competes with NewCardio NWCI.BE NWCIE.OB and privately held companies iCardiac Technologies, Monebo Technologies and Cardiocore.
J.P. Morgan Securities advised ERT while Credit Suisse Securities was the adviser for Genstar Capital.
EResearch shares were trading up more than percent at $7.92 on Monday on the Nasdaq.
(Reporting by Balaji Sridharan in Bangalore; Editing by Don Sebastian, Saumyadeb Chakrabarty)