Charles River snags BioFocus, Argenta in $179M deal
The acquisition boosts Charles River's CRO offerings, is expected to be accretive to 2014 net sales
WILMINGTON, Mass.—Charles River Laboratories International, Inc. has entered into a definitive agreement under which it will acquire the contract research organization division of Galapagos NV, which consists of both Argenta and BioFocus. The acquisition will total €129 million (approximately $179 million) in cash, and in addition to the initial purchase price, the deal includes future performance payments of up to €5 million (approximately $7 million).
Charles River will acquire all of BioFocus’ and Argenta’s service operations in the United Kingdom and the Netherlands, as well as client contracts, order pipeline, premises, equipment and further obligations of the two companies. All BioFocus and Argenta employees will join the Charles River organization upon completion of the deal. The transaction is expected to close in the second quarter of this year, subject to customary closing conditions, and is expected to be accretive to Charles River’s net sales for 2014. The deal is also expected to be accretive to non-GAAP earnings per share for 2014 by approximately 10 cents.
“The acquisition of Argenta and BioFocus is precisely in line with our strategy to build a broader portfolio of essential products and services to support the drug discovery and development continuum, and the increasing virtualization of the biopharmaceutical industry,” James C. Foster, chairman, president and CEO of Charles River Laboratories, commented in a statement. “Argenta and BioFocus’ upstream in-vitro capabilities will be an excellent fit with our in-vivo expertise, and will enable us to engage with our clients earlier in the drug discovery process. This enhances the value we can provide to our clients because it allows them to outsource integrated drug discovery and early-stage development programs to a single provider. We believe that this acquisition expands our unique drug discovery and early-stage development focus and advances Charles River’s position as a market leader in the fast-growing outsourced discovery services market.”
BioFocus and Argenta offer a broad range of drug discovery services, including target discovery, lead optimization, assay development and screening, in-silico drug discovery, structural biology, ADME, medicinal chemistry and hit identification. The companies also have experience in a variety of therapeutic areas, including oncology, inflammation, respiratory and central nervous system diseases.
The two companies generated combined sales of €63 million (approximately $87 million) last year, and are expected to see a sales growth rate of roughly 10 percent this year.
“We are pleased to sell the Argenta and BioFocus divisions to Charles River, one of the premier life science service providers in the world. These newly acquired capabilities are fully complementary to the services provided by Charles River, and Charles River therefore provides a logical and excellent home for Argenta and BioFocus,” Onno van de Stolpe, CEO of Galapagos. “With this transaction, Galapagos transforms from a hybrid drug discovery service and pipeline company into a research and development biotech focusing on developing innovative drugs for unmet medical needs. We have created significant value in building our service activities, and BioFocus and Argenta have greatly contributed to our current pipeline. The time has now come to move into the next phase of the Company with our focus on the pipeline, and to let Argenta and BioFocus continue their success under the wings of Charles River. We would like to thank the employees of Argenta and BioFocus for their contribution to Galapagos’ success over the years. We wish them the very best within Charles River.”