Charles River Labs to acquire China's WuXi PharmaTech for $1.6 billion, creating global CRO; PPD opens vaccine research center in China

USA-based Charles River Laboratories International, a global provider of research models and associated services and of preclinical drug development services, has signed a definitive agreement to acquire China's WuXi PharmaTech, an R&D outsourcing firm, in a cash and stock transaction valued at around $1.6 billion. This is said to be the largest ever foreign takeover of a Chinese company.

The deal, which based on WuXi's closing price last Friday of $16.31 indicates that Charles River is paying a 30% premium, reflects growing consolidation in the US pharmaceutical industry as research contractors try to offer a broader range of services to drug companies. WuXi's shares leap just over 17% to $19.41 on the news, while Charles River slumped 14.4% to $5.73, but the firm also post a drop in earnings (see later).

Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies, the total consideration to be paid will be $21.25 per WuXi American Depositary Share (ADS). Each WuXi ADS will be exchanged for $11.25 in cash and $10.00 of Charles River common stock determined by an exchange ratio.