Charles River Laboratories International’s $800 million acquisition of MPI Research Inc.

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

Charles River Laboratories International, Inc. (NYSE: CRL) announced today that it has entered into a definitive agreement to acquire MPI Research for approximately $800 million in cash, subject to customary closing adjustments.

MPI is a premier non-clinical contract research organization (CRO) 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 $240 million. 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 $170 to $190 million to Charles River’s 2018 consolidated revenue based on the anticipated timing of the close, and $260 to $280 million to 2019 consolidated revenue. MPI is expected to be reported as part of Charles River’s Discovery and Safety Assessment segment.

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.

Charles River provides essential products and services to help pharmaceutical and biotechnology companies, government agencies and academic institutions to accelerate their research and drug development efforts. MPI is a non-clinical contract research organization (CRO) that provides comprehensive testing services to biopharmaceutical and medical device companies worldwide.

The Davis Polk corporate team includes partner Michael Davis (Picture) and associates Andrew D. Krause and Daisy Wu. Partner Michael Mollerus and associate Isaac MacDonald are providing tax advice. The executive compensation team includes partner Kyoko Takahashi Lin and law clerk Julia Bogdanovich. Partner Joseph P. Hadley and counsel Darren Mahone are providing credit advice. Partner Richard D. Truesdell Jr. is providing capital markets advice.

Weil advised MPI Research with a team including Private Equity partner Peter Feist and includes Corporate Chairman and Mergers & Acquisitions partner Michael Aiello; Private Equity associates Philip Wolf, Ololade Oladapo (Not Yet Admitted in New York) and Larissa Lucas (Not Yet Admitted in New York); Banking & Finance partner Andrew Yoon; Capital Markets partner Heather Emmel; Technology & IP Transactions head Michael Epstein; Tax partner Helyn Goldstein; Executive Compensation & Benefits partner Amy Rubin; Real Estate partner Samuel Zylberberg; Environmental head Annemargaret Connolly; Employment Litigation partner Gary Friedman; Antitrust partner John Scribner; White Collar Defense, Regulatory and Investigations co-head Steven Tyrrell; White Collar Defense, Regulatory and Investigations partner Holly Loiseau; International Arbitration & Trade partner Ted Posner; Environmental counsel Thomas Goslin and John O’Loughlin; Antitrust counsel Michael Naughton; Banking & Finance associates Steven LePorin and Sean McClay; Technology & IP Transactions associates Dennis Adams and Rami Sherman (Not Yet Admitted in New York); Tax associate Liam Murphy; Executive Compensation & Benefits associates Jennifer Britz and Daniel Rios (Not Yet Admitted in New York); Real Estate associate Joshua Rudin; Employment Litigation associate Thomas McCarthy; Insurance associate Gabriel Gershowitz; Antitrust associate Jonathan Goldsmith; White Collar Defense, Regulatory and Investigations associate Timothy Welch; and Litigation associate Nicole Prunetti.

Involved fees earner: Michael Davis – Davis Polk & Wardwell; Andrew Krause – Davis Polk & Wardwell; Daisy Wu – Davis Polk & Wardwell; Michael Mollerus – Davis Polk & Wardwell; Isaac MacDonald – Davis Polk & Wardwell; Kyoko Takahashi Lin – Davis Polk & Wardwell; Joseph P. Hadley – Davis Polk & Wardwell; Darren Mahone – Davis Polk & Wardwell; Richard Truesdell Jr. – Davis Polk & Wardwell; Peter Feist – Weil, Gotshal & Manges; Michael Aiello – Weil, Gotshal & Manges; Philip Wolf – Weil, Gotshal & Manges; Andrew Yoon – Weil, Gotshal & Manges; Steven LePorin – Weil, Gotshal & Manges; Sean McClay – Weil, Gotshal & Manges; Heather Emmel – Weil, Gotshal & Manges; Michael Epstein – Weil, Gotshal & Manges; Dennis Adams – Weil, Gotshal & Manges; Amy Rubin – Weil, Gotshal & Manges; Gary Friedman – Weil, Gotshal & Manges; Jennifer Britz – Weil, Gotshal & Manges; Thomas McCarthy – Weil, Gotshal & Manges; Annemargaret Connolly – Weil, Gotshal & Manges; Thomas Goslin – Weil, Gotshal & Manges; John O’Loughlin – Weil, Gotshal & Manges; John Scribner – Weil, Gotshal & Manges; Michael Naughton – Weil, Gotshal & Manges; Jonathan Goldsmith – Weil, Gotshal & Manges; Steven Tyrrell – Weil, Gotshal & Manges; Holly Loiseau – Weil, Gotshal & Manges; Ted Posner – Weil, Gotshal & Manges; Timothy Welch – Weil, Gotshal & Manges; Nicole Prunetti – Weil, Gotshal & Manges; Helyn Goldstein – Weil, Gotshal & Manges; Liam Murphy – Weil, Gotshal & Manges; Samuel Zylberberg – Weil, Gotshal & Manges; Joshua Rudin – Weil, Gotshal & Manges;

Law Firms: Davis Polk & Wardwell; Weil, Gotshal & Manges;

Clients: Charles River Laboratories; MPI Research Inc. ;

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Author: Ambrogio Visconti