Charles River Laboratories International, Inc. (NYSE: CRL) announced today that it has completed the previously announced acquisition of the CRO services division of Galapagos NV (Euronext: GLPG), which includes both Argenta and BioFocus. The acquisition positions 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.
Argenta and BioFocus are global leaders in integrated drug discovery services, with a predominant focus on in vitro capabilities. 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 purchase price was €129 million in cash, subject to certain post-closing working capital adjustments. In addition to the initial purchase price, the transaction includes future performance payments of up to €5 million. The acquisition is expected to add approximately 6% to Charles River’s net sales in 2014. It is also expected to be accretive to non-GAAP earnings per share in 2014 by approximately $0.10. Items excluded from non-GAAP earnings per share are expected to include all deal-related costs including amortization of intangible assets.
Use of Non-GAAP Financial MeasuresThis press release contains non-GAAP financial measures, such as non-GAAP earnings per diluted share, which exclude the amortization of intangible assets and other charges related to our acquisitions and expenses associated with evaluating acquisitions. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. This press release also refers to our sales in both a GAAP and non-GAAP (constant currency) basis. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the Company's performance, especially when comparing such results to prior periods or forecasts. We believe that the financial impact of our acquisitions (and in certain cases, the evaluation of such acquisitions, whether or not ultimately consummated) is often large relative to our overall financial performance, which can adversely affect the comparability of our results on a period-to-period basis. In addition, certain activities, such as business acquisitions, happen infrequently and the underlying costs associated with such activities do not recur on a regular basis. Presenting sales on a constant currency basis allows investors to measure our sales growth exclusive of foreign currency exchange fluctuations more clearly. Non-GAAP results also allow investors to compare the Company’s operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. The Company intends to continue to assess the potential value of reporting non-GAAP results consistent with applicable rules and regulations. Reconciliations of the non-GAAP financial measures used in this press release to the most directly comparable GAAP financial measures are set forth in this press release, and can also be found on the Company’s website at ir.criver.com.