Covance , Paraxel to merge in stock deal
PRINCETON, N.J., April 29 (Reuters) - Covance Inc. (CVD - news) and Parexel International Corp.(PRXL - news), companies that supply outsourcing services to pharmaceuticals, said Thursday they agreed to merge in a stock deal valued at $800 million.
The new company, Covance Parexel, will be the largest provider of drug development and outsourcing services for the pharmaceutical industry with a market capital of $2.5 billion, the companies said.
Under the terms of the deal, Paraxel shareholders will receive 1.184 shares of Covance common stock for each share of Parexel stock they hold. Parexel and Covance also agreed to grant each other options to buy a number of shares upon the occurence of certain circumstances, but they did not elaborate on that arrangement.
The tax-free merger, to be structured as a pooling of interests, is contingent upon the approval of both regulators and shareholders of both companies.
Covance Parexel will be well positioned to capitalise on growth opportunities as pharmaceutical companies strive to boost the number of drugs emerging from their pipeline, the companies said. It is expected to generate annual revenues approaching $1.3 billion in 1999, with the merger being accretive to earnings in 2001 and thereafter, the companies said.
Covance Chief Executive Chris Kuebler will take the helm of the new firm as co-chairman and CEO, while Parexel Chief Executive Josef von Rickenbach will become co-chairman and president.
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