Charles River to buy WuXi for $1.6bn
pharmafile | April 27, 2010 | News story | Research and Development | Charles River, Charles River Laboratories, WuXi, contract research
Contract research and laboratory supplies giant Charles River has said it intends to purchase Chinese counterpart WuXi PharmaTech in a $1.6 billion deal that gives it a strong position in Asia’s fast-growing CRO sector.
In a statement, Charles River said the acquisition would create the first global CRO offering fully integrated early-stage drug development services “from molecule creation through first-in-human testing”.
The company said it would fund the purchase through a mixture of cash, stock and debt financing.
As well as being a major supplier of lab animals and equipment, Charles River is already one of the biggest CROs serving the early-stage R&D sector with annual sales of around $1.2 billion.
WuXi PharmaTech, meanwhile, has seen explosive growth in recent years as it took advantage of a trend for Western companies to carry out contract research in Asia, as well as the strong growth of China’s domestic pharmaceutical market.
Last year, the firm brought in revenues of $270 million, and it expects 2010 turnover to be in the $310 to $320 million range. The company also has a smaller contact manufacturing division which brought in around $20 million in 2009.
Charles River’s chief executive James Foster said the combined company would be able to offer services across North America, Europe and Asia, raising the chances that it could forge strategic-level partnerships with pharma companies.
Foster will continue to lead the combined company while WuXi’s founder and chief executive Li Ge will be president of a new reporting division called Global Discovery and China Services. In addition, Dr Li and two other WuXi directors will join Charles River’s board.
Under the terms of the transaction each eligible WuXi share will be exchanged for $10-worth of Charles River stock and $11.25 in cash. That is a 28% premium on WuXi’s ADR closing price on April 23 of $16.57.
The WuXi announcement was made on the same day Charles River reported first-quarter 2010 revenues of $297 million, down 1.4%, with operating profit of $29.5 million, down from $39 million a year ago.
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