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PPD Suitor Has Global Reach

By Jason Frye, posted Sep 16, 2011

Since July news reports that PPD, Inc., was exploring a possible sale of the company, much of the attention has focused on what such a move would mean for the Wilmington-based company.

That’s still unknown.

Now that news reports have identified the suitor as The Carlyle Group, attention has shifted to that company. Last month, Bloomberg reported that the company was in exclusive discussions with PPD about buying the pharmaceutical contract research organization (CRO).

PPD founder and Executive Chairman Fred Eshelman has declined to comment on the news reports of the potential sale, but has said the company was exploring its options to see “if there are any actions which might create value at this time”

The Carlyle Group is a private equity firm headquartered in Washington, D.C., with approximately $153 billion in assets under management. The company’s portfolio reaches across four segments – corporate private equity, real assets, global market strategies and fund of fund solutions – around the world. Within those areas, Carlyle focus on aerospace, defense and government services, consumer and retail providers, energy, financial services, healthcare, industrial, technology and business services, telecommunications, media and transportation.

In short, Carlyle is a wealthy private equity firm with a global reach, and, like other private equity firms, they’re always looking for the next best company to acquire.

That’s where PPD comes in; as a powerhouse in the CRO industry, it’s an attractive target for a group like Carlyle. With strong stock performance since going public, regular dividends to shareholders, and growth in its future, PPD would be an attractive acquisition within the healthcare industry.

But PPD brings with it a bonus – a foot in the door in the defense industry and government services areas. In May, PPD announced

it had been awarded a $45.5 million contract with the U.S. Army. That contract was the most recent in a 21-year history of clinical support service contracts with the U.S. government for research and development. PPD has been involved in more than 900 government and public health drug development projects.

Carlyle already owns two companies in North Carolina, Hickory-based CommScope, which it acquired in January; and nearby Coastal Carolina Clean Power, LLC, based in Kenansville, which it acquired in 2006.

Coastal Carolina Clean Power focuses on renewable electricity generation projects. Currently, Coastal Carolina Clean Power operates one 32-megawatt former coal- and wood-powered generation facility located near Kenansville.

CommScope creates infrastructure for wireless networks and other communication mediums, including manufacturing broadband Internet cables, optical fiber for high-speed data transmission, radio frequency systems and more. Acquired by Carlyle early in 2011, it has continued to grow since the buyout, and recently bought Argus Technologies, an Australian manufacturer of antennas for base stations, stadiums and other wireless applications. The addition of Argus will allow CommScope to broaden its reach in antenna solutions, a huge part of cellular networks and wireless data transmission.

When asked about CommScope’s acquisition of Argus with respect to Carlyle’s position as owner of CommScope, Rick Aspan, vice president of corporate communications for CommScope, said it couldn’t have gone better. Carlyle allowed them autonomy to go ahead with the purchase of Argus with no interference.

“We know our industry and our capabilities and [Carlyle] allowed us to work within that knowledge.”

He said Carlyle’s ownership has opened many doors for CommScope.

“The level of experience their team has in business development and in business operations is incredible, not to mention the huge network of relationships they have in so many industries,” Aspan said.

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