Charles River to acquire MPI research for $800M in cash
Charles River Laboratories International announced that it has entered into a definitive agreement to acquire MPI Research for approximately $800M in cash, subject to customary closing adjustments. MPI is a premier non-clinical contract research organization providing comprehensive testing services to biopharmaceutical and medical device companies worldwide. Acquiring MPI will enhance Charles River's position as a leading global early-stage CRO by strengthening its ability to partner with clients across the drug discovery and development continuum. For 2017, MPI is expected to generate annual revenue of approximately $240M. The purchase price implies multiples of 11.7x non-GAAP EBITDA based on the estimated 2017 results, and approximately 10.5x non-GAAP EBITDA based on the estimated 2018 results including operational synergies. The transaction is expected to close early in the second quarter of 2018, subject to regulatory approvals and customary closing conditions. The acquisition is expected to add $170M to $190M to Charles River's 2018 consolidated revenue based on the anticipated timing of the close, and $260M to $280M to 2019 consolidated revenue. MPI is expected to be reported as part of Charles River's Discovery and Safety Assessment segment. The transaction is expected to be accretive to non-GAAP earnings per share by approximately 25c in 2018 and approximately 60c in 2019. The Company expects to generate operational synergies as a result of the acquisition, with benefits totaling $13M to $16M by the end of 2019. Items excluded from non-GAAP earnings per share are expected to include all acquisition-related costs, which primarily include amortization of intangible assets, certain costs associated with efficiency initiatives, advisory fees, certain third-party integration costs, and the write-off of deferred financing costs and fees related to debt financing. The acquisition and associated fees are expected to be financed through an expansion of Charles River's credit facility and cash. The Company is evaluating fixed-rate debt financing alternatives which could be used to finance the acquisition and for general corporate purposes.