Charles River Laboratories International Inc., a leading provider of research models and associated services, has agreed to buy WuXi PharmaTech Inc. for about $1.6 billion.
Charles River will pay $21.25 a share, comprising $11.25 in cash and $10 in stock, for each WuXi American depositary share, the company said in a statement.
Based on WuXi's closing stock price of $16.57 in New York Stock Exchange on 23 April 2010, the transaction represents a premium of 28 per cent to WuXi shareholders.
Charles River intends to finance the cash portion of the transaction through reserves on hand and one or more sources of new debt financing.
It has already received a financing commitment for a $1.25 billion credit facility from J.P. Morgan Chase and Bank of America Merrill Lynch, the company said.
The combined company will offer an expanded portfolio of products and outsourced services to multinational pharmaceutical, biotechnology and medical device companies and academic and government institutions.
Charles River expects to achieve pre-tax cost savings and synergies of approximately $20 million on an annualised basis, beginning in 2011.