Overview:
On 17 January 2020, Clarivate Analytics signed a definitive agreement to acquire Decision Resources Group (DRG) from Piramal Group for $950m. DRG is a premier provider of high-value data, analytics and insights products and services to the healthcare industry.
The purchase price includes $900m in cash and $50m in Clarivate ordinary shares to be issued following one year anniversary of closing. The acquisition is expected to be accretive to Clarivate earnings in 2020.
About Clarivate Analytics:
Clarivate Analytics is a global leader in providing insights and analytics solutions that drive the entire lifecycle of innovation, from discovery to commercialisation.
It caters to the companies in the life science, government, academic institutions and research and development industry verticals.
It is listed on the New York Stock Exchange and headquartered in Philadelphia, PA.
About Decision Resources Group:
Founded in 1990, DRG provides data driven resources and analytics solutions to enable healthcare market participants to make informed business decisions about critical commercial challenges. It is a division of Piramal Enterprises, a publicly traded company in India.
It has deep and broad customer relationships with key players biopharma, payer / provider and med tech domain, Key clients include Bayer, Pfizer, GSK, Novartis, Magellan Health, Medtronic, Philips Healthcare, Roche, Merck, Komodohealth and Trilliant Health.
In 2019, DRG generated $207m in revenue with 9% organic growth and $47m in adjusted EBITDA. c.70% revenue is subscription based or reoccurring in nature.
Transaction Rationale:
The transaction creates a leading life sciences data and analytics provider of differentiated scale and capabilities and doubles the size of Clarivate’s life sciences business. It also elevates Clarivate’s positions in the $19bn life sciences analytics market which is growing at a double digit rate of 12%.
The combination of Clarivate’s pre-clinical solutions with DRG’s commercialisation solutions will allow Clarivate to offer a synergistic portfolio of tools and services across the entire life sciences, drug, device and medical technology value chain.
The transaction is expected to EPS accretive to Clarivate in 2020, including the impact of equity offering. It is expected to adjusted EBITDA margin and cash flow margin accretive including run-rate cost savings.
The deal values DRG at an EV / Sales multiple of 4.6x and an EV / adjusted EBITDA (1) multiple of 20.2x. Cost synergies of $30m are expected to be realised over the next 18 months.
Revenue growth acceleration is expected from sales into shared client base and sales of new products that leverage complementary datasets and expertise.
(1) Excludes $30m of identified cost savings
The Chesapeake Group was not the advisor in this transaction.