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Charles River Laboratories and Inveresk to Combine to Create a
Leading Global Partner to the Pharmaceutical and Biotechnology Industry
- High-End Products and Services from Discovery Through the Clinic -
WILMINGTON, Mass. and CARY, N.C., July 1 /PRNewswire-FirstCall/ -- Charles
River Laboratories International, Inc. (NYSE:CRL) and Inveresk Research Group,
Inc. (NASDAQ:IRGI) announced today that their respective boards of directors
have approved a definitive merger agreement creating a leading global partner
in providing essential preclinical and clinical drug development services and
products to the pharmaceutical and biotechnology industry. The strategic
combination significantly expands the new company's services portfolio and
strengthens its global footprint in the growing market for pharmaceutical
research and development products and services.
The combination of Charles River and Inveresk will create a company with
approximately $920 million in revenues based on the twelve months ended March
2004, with substantial profitability and strong cash flow, giving it the size
and financial stability to support the growing demand for outsourced
development services from today's international pharmaceutical and
biotechnology companies. The company will have operations throughout the
United States, Canada, Europe and Japan.
Under the terms of the merger agreement, Inveresk shareholders will receive
0.48 shares of Charles River common stock and $15.15 in cash for each share of
Inveresk common stock they own, representing a total consideration of $38.61
per common share, or a transaction value of approximately $1.5 billion, based
on Charles River's closing price on June 30, 2004, of $48.87 per share. The
stock component of the transaction is intended to be tax free for Inveresk's US
shareholders. Following the close of the transaction, Charles River's
shareholders will own approximately 73 percent of the fully diluted shares of
the new company, and Inveresk's shareholders will own approximately 27 percent.
As a result of the transaction, Charles River's 2005 non-GAAP earnings per
fully-diluted share are expected to be in a range of $2.30 to $2.40, and a
range of $2.66 to $2.76 in 2006. On a GAAP basis, earnings per fully-diluted
share are expected to be in a range of $1.75 to $1.85 in 2005, and a range of
$2.33 to $2.43 in 2006. GAAP earnings are impacted by amortization of
intangible assets, which is accelerated in 2005 and declines in 2006.
Management believes that non-GAAP earnings per share, which excludes one-time
charges and amortization of intangible assets related to the merger, provides
investors with a more appropriate means for assessing and understanding its
operations, as it provides an indication of the profitability and cash flows of
the combined businesses going forward.
James C. Foster, Charles River's Chairman, President and Chief Executive
Officer said, "Joining our two companies is a transformational combination that
builds a broader strategic platform for growth. The new Charles River will be
well positioned to provide essential products and services spanning the drug
research and development effort, from early discovery through clinical trials.
The merger will enhance our ability to serve our customers and accelerate their
research efforts, while improving our operating efficiency. The combination
expands our customer base and better positions us to benefit from the
continuing growth in research and development spending."
Dr. Walter Nimmo, Inveresk's Chairman, President and Chief Executive Officer
said, "Inveresk has delivered excellent returns for shareholders by building an
industry-leading services offering focused on meeting the needs of our clients.
The combination of Inveresk and Charles River will expand the services both
companies can offer to our clients, increase opportunities for our employees
and continue to deliver excellent value to our shareholders."
The new entity will be a global leader in research models and services, a
leader in drug safety testing, and one of the main providers of biosafety
testing on a worldwide basis. It will have a significant presence in the
market for Phase I-IV clinical development services. The expanded global
footprint and the combination of the two companies' scientific expertise and
international sales and marketing are expected to increase the new company's
ability to serve existing clients and to reach a broader market.
Mr. Foster added, "We are bringing together two strong companies with
complementary businesses to create a leading player across multiple disciplines
in the drug discovery and development spectrum. As a leading player in
research models and drug safety testing, the combined company will provide a
platform to build larger businesses in preclinical and clinical disciplines
where we already offer products and services, and to enter new closely related
businesses with the potential for growth and profitability."
As a result of the combination, Charles River expects to achieve pre-tax cost
savings and synergies of approximately $10 million in 2005, principally from
consolidation of corporate infrastructure, as well as from operating
efficiencies. The company expects additional pre-tax cost savings and
synergies of $10 million in 2006, or a total annualized rate of at least $20
million. Charles River also expects revenue growth to increase as a result of a
broader portfolio of essential products and services, a larger global footprint
and synergies between the preclinical and clinical businesses.
Upon closing of the transaction, James C. Foster will become Chairman,
President and Chief Executive Officer of the combined company. Dr. Walter
Nimmo will become Vice Chairman of the Board and Chief Scientific Officer of
Charles River. All senior divisional operating executives of both companies
will remain with the company. Charles River's Board of Directors will be
increased to twelve members, including three from Inveresk.
The combined company will be called Charles River Laboratories and will
continue to trade on the New York Stock Exchange under the ticker CRL. The
Inveresk brand will be retained for all preclinical and clinical businesses.
The company, with more than 7,300 employees and 97 locations in twenty
countries, will be headquartered in Wilmington, Massachusetts.
The agreement is subject to approval by both Charles River and Inveresk
shareholders and customary regulatory approvals. The transaction is expected
to be completed in the fourth quarter of 2004.
Credit Suisse First Boston LLC acted as financial advisor to Charles River, and
Davis Polk & Wardwell provided legal counsel. Goldman, Sachs & Co. acted as
financial advisor to Inveresk, and Clifford Chance provided legal counsel.
Conference Call and Webcast
Charles River and Inveresk will host a conference call and webcast to discuss
the merger on Thursday, July 1, at 9:00 a.m. ET. Conference Call Details:
Dial-in: (800)475-2151 Domestic
(973)582-2710 International
Replay dial-in: (877)519-4471 Domestic
(973)341-3080 International
Passcode: 4933840
Webcast: Please go to ir.criver.com or http://www.inveresk.com/,
Investor Relations, within 15 minutes prior to the
call and select the webcast link.
The conference call replay and archived webcast will be available until 5:00
p.m. EDT on Thursday, July 15, 2004.
About Charles River
Charles River Laboratories, based in Wilmington, Massachusetts, is a leading
provider of critical research tools and integrated support services that enable
innovative and efficient drug discovery and development. The Company is a
global leader in providing the animal research models required in research and
development for new drugs, devices and therapies. The Company also offers a
broad and growing portfolio of products and services that enable customers to
reduce cost, increase speed, and enhance productivity and effectiveness in drug
discovery and development. Charles River's customer base spans over 50
countries, and includes all of the major pharmaceutical companies,
biotechnology companies, and many leading hospitals and academic institutions.
For more information on Charles River, visit our website at
http://www.criver.com/.
About Inveresk
Inveresk is a leading provider of drug development services to companies in the
pharmaceutical and biotechnology industries. Through its Pre-clinical and
Clinical business segments, the Company offers a broad range of drug
development services, including pre-clinical safety and pharmacology evaluation
services, laboratory sciences services and clinical development services.
Inveresk currently provides a comprehensive range of pre-clinical and clinical
development services on a world-wide basis. The Company's client base includes
major pharmaceutical companies in North America, Europe and Japan, as well as
many biotechnology and specialty pharmaceutical companies. For more information
on Inveresk, visit our website at http://www.inveresk.com/.
Caution Concerning Forward-Looking Statements. This document includes
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements may be identified by
the use of words such as "anticipate," "believe," "expect," "estimate," "plan,"
"outlook," and "project" and other similar expressions that predict or indicate
future events or trends or that are not statements of historical matters.
Forward-looking statements include, but are not limited to: 1) The transaction
is expected to close in the fourth quarter of 2004; and 2) Charles River
expects revenue growth to increase as a result of a broader portfolio of
essential products and services, a larger global footprint, and synergies
between the preclinical and clinical business. These statements are based on
Charles River's and Inveresk's current expectations and beliefs, and involve a
number of risks and uncertainties that could cause actual results to differ
materially from those stated or implied by the forward-looking statements.
Those risks and uncertainties include, but are not limited to: 1) the
possibility that the companies may be unable to obtain stockholder or
regulatory approvals required for the merger; 2) problems may arise in
successfully integrating the businesses of the two companies; 3) the
acquisition may involve unexpected costs; 4) the combined company may be unable
to achieve cost-cutting synergies; 5) the businesses may suffer as a result of
uncertainty surrounding the acquisition; and 6) the industry may be subject to
future regulatory or legislative actions and other risks that are described in
Securities and Exchange Commission (SEC) reports filed by Charles River and
Inveresk. Because forward-looking statements involve risks and uncertainties,
actual results and events may differ materially from results and events
currently expected by Charles River and Inveresk. Charles River and Inveresk
assume no obligation and expressly disclaim any duty to update information
contained in this news release except as required by law.
This filing may be deemed to be solicitation material in respect of the
proposed merger of Charles River Laboratories and Inveresk Research Group, Inc.
In connection with the proposed transaction, a registration statement on Form
S-4 will be filed with the SEC. SHAREHOLDERS OF CHARLES RIVER AND SHAREHOLDERS
OF INVERESK ARE URGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT
DOCUMENTS FILED WITH THE SEC, INCLUDING THE JOINT PROXY STATEMENT/PROSPECTUS
THAT WILL BE PART OF THE REGISTRATION STATEMENT, BECAUSE THEY WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. The final joint proxy
statement/prospectus will be mailed to shareholders of Charles River and
shareholders of Inveresk. Investors and security holders will be able to
obtain the documents free of charge at the SEC's website, http://www.sec.gov/,
from Charles River Laboratories, 251 Ballardvale Street, Wilmington, MA 01887,
Attention: General Counsel, or from Inveresk Research Group, 11000 Weston
Parkway, Cary, North Carolina 27513, Attention: Secretary. In addition,
shareholders may access copies of the documentation filed with the SEC by
Charles River on Charles River's website at http://www.criver.com/ and
shareholders may access copies of the documents filed with the SEC by Inveresk
on Inveresk's website at http://www.inveresk.com/.
Charles River, Inveresk and their respective directors and executive officers
and other members of management and employees may be deemed to be participants
in the solicitation of proxies from their respective shareholders in respect of
the proposed transactions. Information regarding Charles River's directors and
executive officers is available in Charles River's proxy statement for its 2004
annual meeting of shareholders, which was filed with the SEC on April 9, 2004,
and information regarding Inveresk's directors and executive officers is
available in Inveresk's proxy statement for its 2004 annual meeting of
shareholders, which was filed with the SEC on March 31, 2004. Additional
information regarding the interests of such potential participants will be
included in the joint proxy statement/prospectus and the other relevant
documents filed with the SEC when they become available.
DATASOURCE: Inveresk Research Group, Inc.
CONTACT: Investor and Media Jonathan Birt or Matt Dallas both of
Financial Dynamics for Inveresk, +1-212-850-5634; or Investors, Susan E. Hardy
Director, Investor Relations, +1-978-658-6000, Ext. 1616, or Elizabeth A.
Ferber, Director, Corporate Communications, +1-978-658-6000, Ext. 1693, both
of Charles River Laboratories
Web site: http://www.inveresk.com/
http://www.criver.com/