US drug development company Parexel International is being acquired by private equity group Pamplona Capital Management in a deal valued at approximately $5 billion, including debt.

The companies have signed a definitive agreement under which Pamplona will acquire all of Parexel’s outstanding shares for $88.10 per share in cash, a premium of nearly 28% to the Massachusetts-based firm’s unaffected closing stock price on May 5.

According to the Reuters news agency, activist investors, including Starboard Value, have been pressurizing Parexel to explore a sale because profit margins have consistently lagged those of its peers.

Chairman and CEO of Parexel, Josef von Rickenbach, said the all-cash transaction and the significant value it provides is in the best interest of Parexel shareholders and the company.

“As our results over the past year show, the market for biopharmaceutical services is evolving. We believe the more flexible corporate structure offered by this transaction will better position us to advance Parexel’s strategy in light of these realities and to shape the company to best capitalize on our exciting market opportunities,” he stated.

The transaction is expected to close early in the fourth quarter of 2017, subject to the approval of the majority of Parexel’s shareholders and other customary conditions. Parexel’s board of directors has unanimously approved the takeover. Upon completion, Parexel will become a privately held company.

The proposed deal is the latest move in a sector that has seen some major mergers in recent weeks as the contract research industry continues to consolidate. These include InVentiv Health and INC Research combining to form one of the world’s largest businesses for outsourced research services. The new company will be a top three contract research organization with estimated net revenues of $3.2 billion.

In addition, Thermo Fisher Scientific’s proposed $7.2 billion purchase of Dutch drug intermediates manufacturer Patheon is said to create a contract services giant. Last year, contract researcher Quintiles Transnational Holdings completed a $9 billion “merger of equals” with IMS Health Holdings.