Charles River to Merge with Wuxi

Charles River Laboratories International and WuXi PharmaTech (Cayman) have signed an agreement under which the companies will combine in a cash and stock transaction valued at approximately US$1.6 billion.

The combined company, which will retain the name Charles River, will offer an expanded portfolio of products and outsourced services to multinational pharmaceutical, biotechnology and medical device companies and academic and government institutions.

Dr Ge Li, chairman and CEO of WuXi, said, “As a result of this transaction, Charles River will be able to immediately expand its presence in China and avail itself of WuXi’s expertise in chemistry services, while simultaneously, WuXi will be in a position to accelerate its Good Laboratory Practice (GLP) toxicology capabilities.”

As a result of the combination, the company expects to achieve pre-tax cost savings and synergies of approximately US$20 million on an annualized basis, beginning in 2011, principally from consolidation of corporate infrastructure, as well as from operating efficiencies.

The transaction is expected to be neutral to slightly accretive to 2011 earnings per share on a non-GAAP basis and increasingly accretive thereafter. Items excluded from non-GAAP results are expected to include all deal-related costs including amortization.