Charles River Laboratories to Acquire MPI Research for $800 Million

Equities Research  |

Charles River Laboratories (NYSE: CRL), a contract research company that supports the development of a significant percentage of drugs that the FDA approves (70% in 2016, according to the company's website), announced the acquisition of MPI Research today for approximately $800 million in cash. The acquisition, to be financed through an expansion of Charles River’s existing credit facility and cash, is expected to be accretive to non-GAAP EPS by about $0.25 this year and $0.60 in 2019.

In addition to meeting our disciplined acquisition criteria, MPI is an exceptional strategic fit for Charles River because it incorporates the key attributes we require in an acquisition: access to growing end markets, high-quality services, scientific expertise, and complementary capabilities. MPI’S one-million-square-foot, single-site facility in Michigan will provide needed capacity to meet current and future demand.

- James C. Foster, Chairman and Chief Executive Officer of Charles River Laboratories.


Source: Charles River Laboratories

The purchase price implies multiples of 11.7x non-GAAP EBITDA for 2017 and 10.5x non-GAAP EBITDA for 2018 based on estimated results for MPI including operational synergies. The deal, expected to close early in Q2, is expected to add $170 to $190 million to Charles River’s 2018 consolidated revenue and $260 to $280 million to 2019 consolidated revenue.

The company said that the acquisition will:

  • Expand its biotechnology client base
  • Expand service portfolio by adding ototoxicity and abuse liability capabilities, and expand Charles River’s existing capabilities in general toxicology and specialty toxicology, including ophthalmology, juvenile toxicity, molecular biology, and surgery, as well as medical device testing
  • Build scale on top of Charles River's legacy safety assessment infrastructure
  • Enhance growth profile through profitable revenue growth and meaningful accretion to non-GAAP EPS.


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Companies

Symbol Name Price Change % Volume
CRL Charles River Laboratories International Inc. 126.91 -3.97 -3.03 37,747 Trade

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