SEC filing sparks speculation PE firm plans Medidata takeover

19-Mar-2012 - Last updated on 19-Mar-2012 at 08:53 GMT

A SEC filing has created speculation that Medidata is the target of a private equity takeover attempt by Vista Equity Partners.

The filing with the US Securities and Exchange Commission (SEC) shows Vista, a private equity firm with a technology and software portfolio, has taken a 5.6 per cent stake in Medidata. Having looked at the firm’s history, some have speculated the investment is a precursor to a takeover attempt.

“We believe Vista may have serious interest in taking Medidata private”, Sandy Draper, senior vice president at Raymond James, wrote. Vista started accumulating a stake in Medidata in October.

Medidata has some of the attributes, such as predictable revenues, which attracted private equity firms to CROs (contract research organisation) and drove the wave of consolidation seen last year. After a busy 2011 industry observers expect consolidation to slowdown this year.

“While we wouldn’t be surprised by one or two larger consolidations and see strategic and private equity buyers as still active, we do expect to see fewer newsworthy [acquisitions] in 2012”, Eric Coldwell, managing director at RW Baird, wrote.

Having just ended its second full year as a public company, shares in Medidata are trading at $25 (€19), up more than 50 per cent on the pricing of its initial public offering (IPO) in June 2009.

Medidata declined to comment on the speculation, telling Outsourcing-Pharma that, as a policy, it does not comment on shareholder activities. Vista failed to respond to a request for comment in time for publication.

‘Holes in the castle’

A private equity takeover attempt is one of two events Draper thinks could send Medidata shares soaring in 2012. The other is big competitive wins, namely against Oracle, which capitalise on what Tarek Sherif, CEO of Medidata, described as “some holes in the castle” of its closest rivals.

Sherif made similar comments about upheaval at a rival in May. Draper, however, said Medidata is yet to publicly demonstrate big competitive wins since Oracle bought Phase Forward. According to Sherif this could change as Medidata aggressively goes after perceived weaknesses this year.

“There are some big opportunities out there which are not contemplated in the guidance that we gave. They could be a swing factor so you could see more acceleration in the latter half of the year”, Sherif said.