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Charles River Labs to buy HemaCare for $380M, expanding in cell therapy

Dive Brief:

  • Charles River Laboratories, a major contract research organization, said Monday it will buy cell therapy specialist HemaCare for about $380 million.

  • The deal represents a 27% premium to HemaCare's closing share price of $20 on Dec. 13, Charles River said in Dec. 16 news release. It will be financed through the company's existing cash and credit facility, according to the statement.

  • Both companies' boards have approved the acquisition, in addition to HemaCare directors, officers, and investors who together control more than half of the company's shares. The transaction should close in the first quarter of 2020, Charles River stated.

Dive Insight:

The deal reflects the growing importance of gene and cell therapies for the future of medicine. Within five years, 10 to 20 new products may be approved each year in the market, Charles River CEO James Foster said in the company's statement, echoing predictions made by leaders of the Food and Drug Administration.

HemaCare is uniquely positioned because it works with a wide range of human-derived cellular products and offers a spectrum of services to customers, Charles River said. HemaCare has worked on all of the cell therapy drugs currently approved by the FDA, Foster said.

"As a result of the scientific innovation that is expected to drive a rapid increase in cell therapy product approvals, the addressable market for HemaCare's products is expected to increase from approximately $200 million today to nearly $2 billion in 10 years," Charles River said.

Cell therapies currently represent about $100 million in annual revenue for Charles River, the company said. It expects HemaCare to "immediately drive profitable revenue growth," with annual gains of at least 30% for five years.

Charles River said it expects the acquisition to add at least $50 million in its 2020 revenue, with a neutral effect on net income next year and increased profits in future years. The company reported that revenue rose 14% to $668 million in the third quarter.

Much of that third-quarter revenue boost came from acquisitions. Charles River in February announced plans to buy Citoxlab, a non-clinical CRO, for 448 million euros, or about $498 million.

Written by: Andrew Dunn

Published on: Dec. 19, 2019

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