Charles River Laboratories Buys Inveresk

Create a Leading Global Partner to the Pharmaceutical and Biotechnology Industry

05-Jul-2004

Charles River Laboratories Inc., the world's biggest provider of animals for drug research, on Thursday said it will acquire Inveresk Research Group Inc. in a $1.5 billion deal aimed at boosting its drug-testing business.

Charles River, which raises mice and rats for drug and biotechnology companies, and Inveresk, which tests potential drug candidates in animals, said the cash-and-stock deal is valued at $38.61, representing a 25.2 percent premium over its closing price on Wednesday. The boards of both companies have approved the deal. Shares of Cary, North Carolina-based shares rode to $36 in pre-market electronic trading on INET, up from a Wednesday close of $30.84 on Nasdaq.

The move comes at a time when drug companies are boosting their research and development spending to replenish drug pipelines as older products lose patent protection. "Charles River is now more diversified and can provide more services in a market where we are seeing an acceleration in growth," said Paul Knight, an analyst at Thomas Weisel Partners.

BASi opens new facility in Europe to better serve pharmaceutical and biotech companies

Read news

The acquisition, which will create a company with about $920 million in revenue, could herald more mergers in the field, he said, as there has been relatively little consolidation over the past few years and many companies that provide tools and services to the drug industry have plenty of cash on hand.

Inveresk shareholders will receive 0.48 share of Charles River common stock and $15.15 in cash for each Inveresk share they own, for a total value of $38.61 per common share based Charles River's closing stock price of $48.87 on Wednesday. Inveresk shares closed at $30.84.

Charles River forecast earnings in a range $1.75 to $1.85 a share in 2005, and in a range of $2.33 to $2.43 in 2006 as a result of the deal. In 2005 the company expects to save about $10 million in costs, mainly by consolidating corporate infrastructure. The company expects additional cost-savings of $10 million in 2006.

Charles River, based in Wilmington, Massachusetts, said its shareholders will own roughly 73 percent of the fully diluted shares of the combined company. James Foster, Charles River's chairman, president and chief executive, will continue to hold those roles at the combined company.

The combined company will be called Charles River Laboratories and will continue to trade on the New York Stock Exchange under the ticker CRL. The Inveresk brand will be retained for all preclinical and clinical businesses. The company, with more than 7,300 employees and 97 locations in twenty countries, will be headquartered in Wilmington, Massachusetts.

The agreement is subject to approval by both Charles River and Inveresk shareholders and customary regulatory approvals. The transaction is expected to be completed in the fourth quarter of 2004.

https://www.bionity.com/en/news/38343/charles-river-laboratories-buys-inveresk.html