Charles River Labs, WuXi PharmaTech Mutually Agree To Terminate Acquisition Agreement - Update

(RTTNews) - Drug development services provider Charles River Laboratories International, Inc. (CRL: News ) announced Thursday that it has mutually agreed to terminate their acquisition agreement with drug research and development outsourcing company WuXi PharmaTech (Cayman), Inc. (WX: News ).

The decisions to terminate the deal follows opposition for the deal primarily from large stakeholders like JANA Partners LLC, Relational Investors, and Neuberger Berman, as well as from other investors and proxy advisory firm Proxy advisory firm RiskMetrics, which had also recommended that Charles River's shareholders vote against the proposed deal.

"We also value our stockholders' views and given their concerns about the proposed transaction, and our commitment not to proceed without their support, we have decided that terminating the transaction is the appropriate action to take," Chairman, President and Chief Executive Officer James Foster said in a statement.

Wilmington, Massachusetts-based Charles River will pay a $30 million breakup fee to Wuxi. As a result of the termination of the acquisition agreement, Charles River noted that the special meeting of its stockholders to be held on August 5, 2010 has been canceled.

Charles River agreed in mid-April to combine with WuXi in a cash and stock transaction valued at about $1.6 billion, with the combined entity to provide an expanded portfolio of products and outsourced services to multinational pharmaceutical, biotechnology and medical device companies and academic and government institutions.

Charles River provides research models and laboratory animal support expertise to help its global partners advance their research and drug development efforts. Meanwhile, WuXi has operations in China and the U.S., and its services are designed to assist its global partners in shortening the cycle and lowering the cost of drug and medical device R&D.

The proposed would have helped Charles River be able to immediately expand its presence in China and avail itself of WuXi's expertise in chemistry services, while WuXi would have been in a position to accelerate its good laboratory practice toxicology capabilities.

"We believed that this transaction, which would have created the premier early-stage contract research organization, would have resulted in long-term strategic benefits for our business and our shareholders," Foster added.

The Company also announced that its Board of Directors has authorized a new $500 million stock repurchase program.

CRL closed Thursday's regular trading session at $31.95, down $1.95 or 5.75% on a volume of 3.22 million shares, higher than the three-month average volume of 1.39 million shares. WX closed at $15.00, down $0.22 or 1.45% on a volume of 0.40 million shares.

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by RTT Staff Writer

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