Charles River to acquire Celsis for $212M

WILMINGTON, Mass.—Charles River Laboratories International Inc. is boosting its services portfolio with the establishment of a definitive agreement to acquire Celsis International Ltd., a leading provider of rapid bacterial detection systems for quality-control testing in the biopharmaceutical and consumer products industries. Charles River will acquire the London-based company, which has some 800 installations in 65 countries worldwide, for $212 million in cash, subject to customary closing adjustments.

The acquisition brings with it Celsis' Advance II, Accel and Innovate systems for non-sterile applications, adding to Charles River Endotoxin and Microbial Detection’s (EMD) recently released PTS-Micro, a rapid bacterial (bioburden) detection system for sterile biopharmaceutical applications. Celsis' Advance II, Accel and Innovate systems, as noted in a presentation detailing the transaction by Charles River, provide “test results in 18 to 48 hours vs. three to seven days for traditional methods.”

Celsis introduced its Accel system for small and medium-sized companies in February of this year, as a system that “reduces time necessary for quality-control assessment of microbial contamination,” which in turn “shortens production cycle times by lowering quarantined inventory levels awaiting quality-control release and reduces working capital requirements.” Jay LeCoque, CEO of Celsis, commented in a statement that “We developed the Accel for manufacturers whose testing requirements are smaller, but we employed the same robustness and ease-of-use of our popular large-capacity Advance platform.”

“The acquisition of Celsis combines leading providers of endotoxin and bacterial testing and bacterial identification to establish EMD as a comprehensive provider of rapid quality-control testing solutions across multiple industries,” James C. Foster, chairman, president and CEO of Charles River Laboratories, said in a press release. “The acquisition nearly doubles the market opportunity for EMD testing products and services, offering access to the consumer products market in addition to our core biopharmaceutical market. Celsis’ robust financial profile enhances the EMD business, which is our highest-growth and one of our highest-margin businesses. We expect Celsis to be immediately accretive to non-GAAP earnings per share in 2015, with a more significant contribution in 2016 and beyond.”

This deal is expected to close in the third quarter of the year, subject to customary closing conditions. It is expected to be accretive to non-GAAP earnings per share by approximately 5 cents in 2015 and 15 to 20 cents in 2016. Operational synergies resulting from this transaction are expected to total at least $2 million next year. Moving forward, Celsis will be reported as part of the EMD business in Charles River's Manufacturing Support segment, and the company noted that this deal “approximately doubles EMD's addressable market opportunity to ~$2B.”