Charles River Laboratories International has signed a binding offer to acquire Citoxlab, a non-clinical contract research organization (CRO), for EUR 448 million in cash (or approximately $510 million based on current exchange rates), Charles River announced on Feb. 13, 2019. The proposed transaction, subject to customary closing adjustments, is expected to close in the second quarter of 2019. When complete, Citoxlab’s shareholders are expected to enter into a definitive purchase agreement.
Citoxlab specializes in regulated safety assessment services, non-regulated discovery services, and medical device testing. The CRO has operations in Europe and North America, which would strengthen Charles River’s position in growing end markets, enhance its global scale and geographic footprint, and augment its scientific capabilities.
Strategic rationale
The acquisition would strengthen the company’s service portfolio. Citoxlab provides a broad suite of early-stage services that would add to Charles River’s existing capabilities in four key areas:
The proposed acquisition would also enhance Charles River’s presence in Europe, particularly in Eastern Europe. Citoxlab has nine operating sites in six countries in Europe and North America, with global capacity totaling over 700,000 ft2.
Charles River’s client base would expand to inlcude Citoxlab’s base of biopharmaceutical, agriculture and industrial chemical, and medical device companies worldwide. Specifically, the proposed acquisition would further expand Charles River’s small and mid-sized biotechnology client base, its fastest-growing client segment.
The proposed acquisition is also expected to generate attractive returns on capital through profitable revenue growth and meaningful accretion to non-generally accepted accounting principles (GAAP) earnings per share.
“The proposed acquisition of Citoxlab would expand and solidify Charles River’s position as the partner of choice for our clients’ early-stage research needs, at a time when we believe there continues to be significant demand for outsourced services from both biotechnology and pharmaceutical companies. Citoxlab would be an exceptional strategic fit for Charles River because it incorporates the key attributes we require in an acquisition: scientific expertise, complementary capabilities, talented people, and access to growing end markets. The proposed acquisition would also enhance our geographic footprint, particularly in Europe, and our access to a growing biotechnology client base, enabling Charles River to provide a broader range of services proximate to our clients—both large and small,” said James C. Foster, chairman, president, and CEO of Charles River Laboratories, in a company press release.
“At a time when new drug approvals are at record levels and the complexity of each drug candidate is increasing, we believe the collaboration of our respective scientific teams, the implementation of best practices, and the synergies between the early-stage services offered by Charles River and Citoxlab would represent a significant growth opportunity for both organizations, and also enhance the value that we provide to all of our clients to meet their individual needs,” added Jean-François Le Bigot, PhD, chairman and CEO of Citoxlab, in the press release.
Source: Charles River Laboratories via PharmTech
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