Where two Rivers meet

Charles River gains majority ownership of research model provider Vital River

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WILMINGTON, Mass.—Charles River Laboratories Intl. Inc. hasannounced the signing of an agreement with Vital River, under which it willacquire 75 percent ownership of the China-based commercial provider of researchmodels and related services. Vital River has served as a licensee forproduction and distribution of Charles River research models in China for morethan 10 years.
 
Per the agreement, Charles River will acquire 75 percentownership of Vital River for approximately $27 million, subject to certainclosing adjustments. Following the transaction, Vital River will be majorityowned and controlled by Charles River. In addition, the agreement also includesan option for Charles River to acquire the remaining 25-percent ownership at alater date. The agreement, which is expected to close in the first quarter of2013, is subject to customary closing conditions, including Chinese regulatoryapprovals. Charles River expects the transaction to be slightly accretive to2013 earnings per share and add more than 1 percent to 2013 total net sales ona full-year basis.
 
"Vital River is the premier commercial provider of researchmodels and related services in China," says Terry Fisher, director of globalpartnerships at Charles River. "Through this acquisition, Charles River will beable to provide high-quality research models and associated services to theemerging China market for drug discovery and development."
 
 
The transaction bolsters Charles River's existing positionas a provider of research models as well as preclinical and clinical supportservices. The company's offerings include animal diagnostic testing, pharmacologymodels of disease, pathology services and preconditioning services. Withheadquarters in Beijing, Vital River has more than 350 employees and fourstate-of-the-art facilities. The company produces more than three millionSPF/VAF standard laboratory rodents each year, with offerings that includerats, mice and rabbits. Charles River and Vital River have cooperated since thelatter's establishment, Vital River notes on its website, adding that it has"successively introduced nucleus colonies from [Charles River], now having over30 strains of rodents, including CD (SD) IGS, Wistar, Wistar Han IGS, SHR,CD-1(ICR), BALB/c, C57BL/6, immunodeficient mice and other common strains."
 
In addition to its animal research models, Vital River alsooffers related services including animal health monitoring and breeding andhusbandry support. In terms of contract management, the company has managed thePeking University Health Science Center's Laboratory Animal Center since 2001,and in 2009, Nanjing Medical University also enlisted Vital River to manage itsLaboratory Animal Center, as well.
 
As for how long the transaction has been in the works,Fisher notes that, "In recent years, we recognized the growth potential inChina for research models as well as the benefits of enhancing our relationshipwith an existing partner in the region." He adds that forging "a strongerrelationship with our existing partner was a logical decision as it supportsthe growth and expansion plans of both organizations."
 
 
"The marketplace in China is vibrant due to the government'ssupport of the life-science industry and the interest of multinationalcustomers," says Fisher. "Because of this, we anticipate growth in the regionfor Charles River's products and services."
 
 
"We expect demand for research models in China tosignificantly increase over the next several years as drug developmentinitiatives in academia, government and biopharmaceutical companies expand,"James C. Foster, chairman, president and CEO of Charles River, said in a pressrelease regarding the agreement. "Through our acquisition of Vital River,Charles River intends to set the standards for research models in China, thethird-largest pharmaceutical market in the world, and play a leading role inthis emerging opportunity."


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