Charles River Laboratories International, Inc. (NYSE: CRL) announced today that it has entered into a definitive agreement to acquire the CRO services division of Galapagos NV (Euronext: GLPG), which includes both Argenta and BioFocus. These businesses are global leaders in integrated drug discovery services, with a predominant focus on in vitro capabilities. The acquisition will position Charles River as a full service, early-stage contract research organization (CRO), with integrated in vitro and in vivo capabilities from target discovery through preclinical development.
The purchase price is €129 million in cash (approximately $179 million based on current exchange rates). In addition to the initial purchase price, the transaction includes future performance payments of up to €5 million (approximately $7 million based on current exchange rates).
James C. Foster, Chairman, President, and Chief Executive Officer of Charles River Laboratories, commented, “The acquisition of Argenta and BioFocus is precisely in line with our strategy to build a broader portfolio of essential products and services to support the drug discovery and development continuum, and the increasing virtualization of the biopharmaceutical industry. Argenta and BioFocus’s upstream in vitro capabilities will be an excellent fit with our in vivo expertise, and will enable us to engage with our clients earlier in the drug discovery process. This enhances the value we can provide to our clients because it allows them to outsource integrated drug discovery and early-stage development programs to a single provider. We believe that this acquisition expands our unique drug discovery and early-stage development focus and advances Charles River’s position as a market leader in the fast-growing outsourced discovery services market.”
“The acquisition will enhance our sales growth rate and be accretive to non-GAAP earnings per share in 2014, and we expect increased contribution in 2015 and beyond,” Mr. Foster concluded.Located in the United Kingdom and the Netherlands, Argenta and BioFocus provide a full suite of drug discovery services from target discovery through the delivery of clinic-ready candidates to a broad range of pharmaceutical and biotechnology companies. Their deep in vitro expertise includes medicinal chemistry, target discovery, and complex in vitro biology, as well as therapeutic area expertise in respiratory, inflammation, oncology, and CNS diseases. The significant capabilities of Argenta and BioFocus’s more than 340 scientists will augment Charles River’s scientific leadership. David Smith, currently CEO of Galapagos Services, will continue to lead Argenta and BioFocus as Corporate Vice President, In Vitro Discovery Services. Additional Financial and Transaction Details In 2013, Argenta and BioFocus generated combined sales of €63 million (approximately $87 million based on current exchange rates). The sales growth rate for the combined Argenta and BioFocus businesses is expected to be approximately 10% in 2014. The purchase price implies a multiple of approximately 2x 2013 sales and approximately 12x 2013 adjusted EBITDA.