A major research lab in Michigan’s Great Southwest has entered into a definitive agreement to be acquired by another international company for approximately $800-million in cash, but should still play a vital role in the economic development fabric of the community of Mattawan.
Charles River Laboratories International, Inc. has announced its intent to acquire MPI Research of Mattawan, and its one-million-square foot facility there, subject to regulatory approval and 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.
James C. Foster is Chairman and Chief Executive Officer of Charles River Laboratories. He says, “In addition to meeting our disciplined acquisition criteria, MPI is an exceptional strategic fit for Charles River because it incorporates the key attributes we require in an acquisition: access to growing end markets, high-quality services, scientific expertise, and complementary capabilities. MPI’S one-million-square-foot, single-site facility in Michigan will provide needed capacity to meet current and future demand.”
Foster also reports that, “In addition to enhancing our value proposition for clients, we believe that the acquisition of MPI will generate value for shareholders, driving profitable revenue growth and non-GAAP earnings per share accretion of approximately $0.25 in 2018 and approximately $0.60 in 2019. We greatly respect MPI’s employees, its scientific capabilities, and the reputation it has built over the nearly 25 years since its founding, and look forward to welcoming MPI to the Charles River family.”
Foster says the strategic rationale behind the acquisition of MPI is to enhance Charles River’s access to growing end markets. He adds, “It builds scale to meet demand, and augments our scientific bench strength, providing a compelling value proposition for both clients and shareholders.”
Additionally the move for Mattawan expands client base inasmuch as the acquisition aligns with Charles River’s strategy to expand its biotechnology client base, its fastest-growing market segment. MPI has specialized in supporting that client segment and is recognized for its scientific expertise, flexible and responsive project management, and client service.
The move also expands the Charles River service portfolio as MPI will add ototoxicity and abuse liability capabilities, and expand Charles River’s existing capabilities in general toxicology and specialty toxicology, including ophthalmology, juvenile toxicity, molecular biology, and surgery, as well as medical device testing.
The addition of MPI is expected to enhance Charles River’s ability to achieve its long-term growth goals. The acquisition is also expected to generate attractive financial returns through profitable revenue growth and meaningful accretion to non-GAAP earnings per share.
For 2017, MPI is expected to generate annual revenue of approximately $240 million. 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.
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.
