Charles River to Acquire Inveresk
Charles River Laboratories International Inc., the world’s biggest breeder of animals for drug research, said Thursday that it would acquire Inveresk Research Group Inc. in a deal valued at $1.4 billion to expand its drug testing business.
Charles River, which raises rodents and other animals on behalf of drug and biotechnology companies, would pay cash and stock worth $35.89 a share. The boards of both companies have approved the deal.
Shares of Cary, N.C.-based Inveresk, which tests potential drugs in animals, closed up more than 14%, and shares of Charles River fell nearly 12%. The deal was originally valued at $1.5 billion, before Thursday’s decline in Charles River’s share price.
The deal comes at a time when drug companies are boosting their research and development spending to replenish drug pipelines as older products lose patent protection.
The acquisition, which would create a company with about $920 million in revenue, would be the latest in nearly two dozen made by Charles River in the last 10 years. In addition to drug testing, the company is moving into the testing of medical devices, such as drug-coated stents.
The company’s move could herald more mergers in the field, analysts said, as there has been relatively little consolidation over the last few years and many research tool companies have cash on hand.
Inveresk shareholders would 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 $35.89 a share based on Charles River’s closing stock price of $43.22 on Thursday.
Wilmington, Mass.-based Charles River said its shareholders would own about 73% of the combined company when the deal closes, probably in the fourth quarter.
James Foster, Charles River chairman, president and chief executive, would continue to hold those roles at the combined company.
Charles River forecast 2005 earnings of $1.75 to $1.85 a share and $2.33 to $2.43 in 2006 as a result of the deal.
Shares of Inveresk finished up $4.35 to $35.19 on Nasdaq. Shares of Charles River closed down $5.65 to $43.22 on the New York Stock Exchange.
