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RIVERSIDE, PA-Under an unusual agreement, Merck & Co. Inc. has sold its 327-acre pharmaceutical manufacturing complex to an entity of Philadelphia-based PRWT Services Inc. PRWT will continue to operate the plant through its affiliate, Cherokee Pharmaceuticals LLC.
Simultaneous with the acquisition, Cherokee signed a five-year supply agreement with Merck for an estimated value of between $100 million and $200 million a year. The plant, known as the Cherokee chemical manufacturing plant, produces antibiotic products for humans and animals. It was among the largest employers in Northumberland County, and the new owner is retaining all 400 employees.
PRWT is an African-American owned company and one of the largest minority-owned firms in the US. It was founded in 1988 to provide business process outsourcing services to state and local governments nationwide. It entered a new line of business in 2000 with the acquisition of Philadelphia-based US Facilities Inc., a facilities management firm. The Merck buy marks its entry into the pharmaceuticals arena.
In a statement, Willie Johnson, PRWT's chairman and CEO, says "the acquisition of the Cherokee plant is consistent with PRWT's vision of growing the company by expanding into new markets, services and lines of business. By establishing a presence in the life sciences market, PRWT can now participate in an industry with tremendous growth potential and establish a strategic supplier relationship with Merck."
It intends to "make considerable capital investments" in the facility. Justin Noll, Cherokee plant manager, says, "we are looking forward to being a stand-alone company and a company which will have great potential for expansion."
Under a global restructuring of its manufacturing operations announced in November 2005, Whitehouse Station, NJ-based Merck announced plans to sell this and four other facilities from which it expected to gain aggregate proceeds of approximately $4 billion. Neither Merck nor PRWT would disclose the price of this acquisition, and, due to the unusual nature of the two-prong agreement, two area industrial brokers contacted by GlobeSt.com declined to offer even a guess on the price.
A spokeswoman for Cherokee tells GlobeSt.com that 127 acres are "inside the fence line," and the complex contains 60 buildings, but she was unable to immediately quantify the aggregate square footage. Although PRWT did not receive state funding for the acquisition, Gov. Ed Rendell issued a statement applauding the agreement and citing his own previous work with PRWT as both mayor of Philadelphia and governor. "We're looking for big things from PRWT. We'll be keeping an eye on this venture, because our manufacturing base is vital to our economy and pharmaceuticals, specifically, is an important sector."
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