Published in Breaking News

MPI Research to sell to rival Charles River Laboratories in $800 million deal

BY Wednesday, February 14, 2018 08:31am

MATTAWAN — MPI Research Inc. is selling to rival Charles River Laboratories International Inc. for $800 million in cash.

The Wilmington, Mass.-based Charles River Laboratories (NYSE: CRL) and MPI Research say they have signed a definitive agreement for the acquisition, which should close in the second quarter pending regulatory and other approvals.

In a statement announcing the deal, Charles River Chairman and CEO James Foster said MPI’s “one-million-square-foot, single-site facility in Michigan will provide needed capacity to meet current and future demand.”

“It will allow us to expand smoothly into new space as we need it, probably in lieu of building it out somewhere else,” Foster told brokerage analysts during a Tuesday conference call to discuss quarterly results. “So we think this will be a highly strategic facility addition to our portfolio and one that expands our capabilities in a few new areas, but also expands some of the areas that we are currently participating in a more robust way.

“As biotech companies proliferate and pharma companies increasingly rely on outsourced services to improve efficiency and access to expertise, they no longer maintain (those services) in-house. We need additional capacity to accommodate the demand. For that reason, the acquisition of MPI Research is particularly opportune.”  

A pre-clinical contract research organization (CRO) serving pharmaceutical clients, MPI Research is one of the top employers in the Kalamazoo area and generated 2017 revenue of about $240 million. The acquisition is expected to add $170 million to $190 million in revenue to Charles River in 2018, depending on the timing of the close, and $260 million to $280 million in 2019.

MPI would become part of Charles River’s Discovery and Safety Assessment business segment.

“MPI has been performing extremely well, at least at the same growth rates we have enjoyed,” Foster said. “The diversity of their capabilities I think has made them an important partner for lots of companies, particularly small and large high-growth biotech clients. And we’re confident because of their scientific footprint and capability and client interface, that they will be able to continue at similar growth rates going forward.”

Jefferies LLC and SunTrust Robinson Humphrey Inc. served as financial advisers to MPI. Weil, Gotshal & Manges LLP is acting as MPI’s transactional legal counsel. Morgan Stanley & Co. LLC was the exclusive financial adviser to Charles River. Davis Polk & Wardwell LLP is Charles River’s transactional legal counsel and Axinn, Veltrop & Harkrider LLP is acting as antitrust counsel.

The deal comes about two years after MPI founder and CEO Bill Parfet retired.

Charles River on Tuesday reported 2017 sales of $1.87 billion, up from $1.68 billion in 2016.

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