- Charles River Laboratories International Inc. will buy contract services provider MPI Research Inc. for $800 million, bolstering its non-clinical research business and gaining MPI's one-million-square-foot facility in Michigan.
- Charles River expects the acquisition to boost its profits per share by $0.25 this year, increasing to $0.60 in 2019. By revenue, MPI is about an eighth the size Charles River, bringing in an estimated $240 million in annual sales in 2017.
- The deal, announced Feb. 13, is the latest example of ongoing consolidation across the CRO and CMO sectors. Half a dozen deals over the past year have reshaped the industry as contract providers large and small seek greater scale and lower costs.
Charles River's reasons for acquiring MPI check all the boxes for an acquisition: expanding client base, complementing its business portfolio, adding additional capacity and near-term revenue.
In a statement on the deal, Charles River pitched it as bolstering the company's market position as a leading early-stage CRO. MPI specializes in non-clinical research services, such as testing, toxicology and discovery — areas where Charles River has seen strong growth from its existing business.
Once the deal is complete, MPI will be organized under Charles River's Discovery and Safety Assessment (DSA) business unit, which accounted for just over half of the CRO's $1.86 billion in total revenues last year.
The companies expect the deal to close in the second quarter. Depending on that timing, Charles River estimates the deal will add between $170 million to $190 million in 2018 revenues, and between $260 million and $280 million in 2019.
Adding MPI's Michigan facility will also give Charles River more flexibility to meet demand, as its current safety assessment network is near "optimal capacity."
Since late 2016, when Swiss contract giant Lonza Group AG acquired Capsugel SA, the sector has seen a steady drip of deals. Most have been horizontal acquisitions involving contract services companies themselves, although Parexel International Corp. and Albany Molecular Research Inc. (AMRI) were bought up by investment firms.
Like Charles River's deal for MPI, the consolidation has merged business offerings, giving CROs and CMOs more scope to serve a wide range of biotech and pharma clients.
Thermo Fisher's buy of Patheon, for example, added the latter company's CDMO capabilities to Thermo's well-known prowess as an instrument maker and laboratory services provider.