Charles River Laboratories Inc, the world's biggest breeder of animals for drug research, on Thursday said it will acquire Inveresk Research Group Inc for $1.5 billion to expand its drug testing business.
Charles River, which raises rodents and other animals on behalf of drug and biotechnology companies, said the cash-and-stock deal is valued at $38.61 a share. The boards of both companies have approved the deal.
Shares of Cary, North Carolina-based Inveresk were up more than 17 percent in morning trading while shares of Charles River were off about 8 percent.
The acquisition comes at a time when drug companies are boosting their research and development spending to replenish drug pipelines as older products lose patent protection.
"Charles River is now more diversified and can provide more services in a market where we are seeing an acceleration in growth," said Paul Knight, an analyst at Thomas Weisel Partners.
The acquisition, which will create a company with about $920 million in revenue, is the latest in nearly two dozen made by Charles River in the last 10 years. In addition to drug testing, the company is also moving into the testing of medical devices, such as drug-coated stents.
The company's move could herald more mergers in the field, Knight said, as there has been relatively little consolidation over the past few years and many research tool companies have cash on hand.
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