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.

''This transaction revolutionises the contract research landscape by creating the only global contract research organisation, to offer fully integrated research and drug development services from molecule creation to first-in-human testing,'' said James C Foster, chairman, president and CEO of Charles River.

The deal will provide the company an integrated portfolio of products and services globally, at different localities, such as North America, Europe or China, he added.

Foster will continue to lead the combined company and Dr. Ge Li, chairman and CEO of WuXi will become corporate executive vice president and president of global discovery and China services.

WuXi is a leading drug research and development outsourcing company with expertise in discovery chemistry and with operations in China and the United States.

WuXi Pharma is the parent of WuXi AppTec Co. in China and WuXi AppTec Inc. in the US. Its customers include Pfizer, Merck & Co., Novartis and AstraZeneca Plc.

The transaction is expected to be completed by the fourth quarter of 2010.