Water Street Healthcare Partners has sold its portfolio company, AAIPharma Services Corp., a provider of outsourced pharmaceutical services, to Cambridge Major Laboratories, a portfolio company of American Capital. Water Street acquired AAIPharma in 2009.
AAIPharma is a provider of contract services that support all phases of drug development. The company’s capabilities includes analytical and formulation development, material testing services, microbiology, clinical and commercial contract manufacturing, pharmaceutical packaging and stability services. The company has five US and EU certified facilities in North Carolina, South Carolina, New Jersey and Missouri. AAIPharma is headquartered in Wilmington, NC (www.aaipharma.com).
During its term of ownership Waterstreet executed an expansion program that transformed AAIPharma into a leading independent provider of pharmaceutical development services. Over the past two years, AAIPharma has opened a 40,000-square foot technology center, expanded its manufacturing centers and completed an acquisition that extended its capabilities into the material testing services market. Today, AAIPharma provides services that encompass all phases of drug development to more than 500 of the world’s leading pharmaceutical companies.
“We are pleased that the transformation of AAIPharma into a leading provider of drug development and manufacturing services resulted in a sale that creates an industry leader and delivers an outstanding return to our investors,” said Peter Strothman, a partner with Water Street. “We leveraged our team’s extensive pharmaceutical expertise and network of relationships to build on AAIPharma’s core scientific capabilities. Since our investment, the company has doubled its customer base and achieved tremendous growth to create meaningful long-term value for its customers, employees and our investors.”
Water Street Healthcare Partners targets investments ranging from $50 million to $500 million in four health care sectors: distribution, medical products, health care services, and pharmaceutical products and services. The firm has particular expertise in corporate divestitures from healthcare companies. Water Street has more than $1 billion of capital under management and is based in Chicago (www.waterstreet.com).
“We are grateful that our focused strategy to build market-leading health care companies has led to them being acquired by global leaders who are committed to building on their unique capabilities and services,” said Tim Dugan, managing partner, Water Street. “Our team’s deep expertise in health care, extensive operating experience and demonstrated ability to achieve transformational growth has been, and will continue to be, core to the success of Water Street and our family of health care companies.”
Cambridge Major Laboratories, acquired by American Capital in December 2012, is a global chemistry outsourcing partner to the pharmaceutical and biotechnology industries. The company produces pharmaceutical intermediates and Active Pharmaceutical Ingredients (API), from early preclinical development to commercial manufacturing. Cambridge Major Laboratories is headquartered in Germantown, WI (www.c-mlabs.com).
American Capital has committed $391 million to the combination of Cambridge Major Laboratories with AAIPharma. American Capital’s investment is comprised of a revolving credit facility, senior term loan and common and preferred equity.
“AAIPharma’s industry leading formulation development and analytical service offerings complement CML’s world-class API development and manufacturing capabilities, and the combination creates an industry leading contract development and manufacturing organization (“CDMO”), which is positioned for significant growth and expansion,” said Kyle Bradford, American Capital Managing Director. “The combined company will offer shortened development timelines to clients by streamlining and linking services from API development and manufacturing through formulation development and finished drug manufacturing and packaging for solid oral and parenteral products.”
American Capital is a publicly traded private equity firm and asset manager that originates, underwrites and manages investments of $10 million to $750 million in middle market private equity, leveraged finance, real estate and structured products. Founded in 1986, American Capital has $119 billion in total assets under management and has eight offices in the US, Europe and Asia. The firm is headquartered in Bethesda (www.AmericanCapital.com).
© 2013 PEPD • Private Equity’s Leading News Magazine • 10-30-13
