Charles River to buy CiToxLab
Charles River Laboratories (CRL) has agreed to acquire CiToxLab in a €448 million merger that will create the largest player in the early stage CRO space for the pharmaceuticals industry. The deal is expected to close in Q2, subject to labour consultations, regulatory requirements and customary closing conditions.
CiToxLab is itself a relatively recent creation out of M&A activity. It has nine operating sites in six countries in Europe and North America – most obviously France, Canada and Hungary - with global capacity totalling over 65,000 m2. It offers a wide range of non-clinical CRO services, notably regulated safety assessment services, non-regulated discovery services, and medical device testing.
“The proposed acquisition would expand and solidify CRL’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,” said James Foster, CEO, chairman and president of CRL.
The strategic rationale, CRL said, is that adding CiToxLab would strengthen its presence in growing end markets, its global scale, its geographic footprint and its scientific capabilities. It would also expand the company’s client base, particularly in its fastest-growing segment of small and mid-sized biotech. Furthermore, the combination is expected to enhance CRL’s portfolio in four key areas:
- general and speciality toxicology, including developmental and reproductive toxicology and ocular services, and agricultural and industrial chemical testing, including ecotoxicology services of all kinds
- pre-clinical medical device testing services
- non-regulated discovery services
- genomics research, adding expertise in this field to CRL’s mechanistic and investigative toxicology knowledge
The acquisition is expected to add $115-130 million to CRL’s 2019 consolidated revenue. CiToxLab’s revenue is expected to grow at a high-single-digit rate. This is said to be in line with the long-term organic revenue growth target for the Discovery & Safety Assessment segment of CRL, of which it will form a part.