Inveresk and Charles River to merge

The boards of Charles River Laboratories International, from Wilmington, MA and Inveresk Research from Cary, NC, have approved a definitive merger agreement creating a leading global partner in providing essential preclinical and clinical drug development services and products to the pharmaceutical and biotechnology industry.

The strategic combination significantly expands the new company's services portfolio and strengthens its global footprint in the growing market for pharmaceutical research and development products and services.

The combination of Charles River and Inveresk will create a company with approximately $920 million in revenues based on the twelve months ended March 2004, with substantial profitability and strong cash flow, giving it the size and financial stability to support the growing demand for outsourced development services from today's international pharmaceutical and biotechnology companies. The company will have operations throughout the United States, Canada, Europe and Japan.

James Foster, Charles River's chairman, president and ceo said: 'Joining our two companies is a transformational combination that builds a broader strategic platform for growth. The new Charles River will be well positioned to provide essential products and services spanning the drug research and development effort, from early discovery through clinical trials. The merger will enhance our ability to serve our customers and accelerate their research efforts, while improving our operating efficiency. The combination expands our customer base and better positions us to benefit from the continuing growth in research and development spending.'

Dr Walter Nimmo, Inveresk's chairman, president and ceo said: 'Inveresk has delivered excellent returns for shareholders by building an industry-leading services offering focused on meeting the needs of our clients. The combination of Inveresk and Charles River will expand the services both companies can offer to our clients, increase opportunities for our employees and continue to deliver excellent value to our shareholders.'

The new entity will be a global leader in research models and services, a leader in drug safety testing, and one of the main providers of biosafety testing on a worldwide basis. It will have a significant presence in the market for Phase I-IV clinical development services. The expanded global footprint and the combination of the two companies' scientific expertise and international sales and marketing are expected to increase the new company's ability to serve existing clients and to reach a broader market.

As a result of the combination, Charles River expects to achieve pre-tax cost savings and synergies of approximately $10m in 2005, principally from consolidation of corporate infrastructure, as well as from operating efficiencies. The company expects additional pre-tax cost savings and synergies of $10m in 2006, and expects revenue growth to increase as a result of a broader portfolio of essential products and services, a larger global footprint and synergies between the preclinical and clinical businesses.

Upon closing of the transaction, James Foster will become chairman, president and ceo of the combined company. Dr Walter Nimmo will become vice chairman of the board and cso of Charles River. All senior divisional operating executives of both companies will remain with the company. Charles River's board of directors will be increased to twelve members, including three from Inveresk.

The combined company will be called Charles River Laboratories and the Inveresk brand will be retained for all preclinical and clinical businesses. The company, with more than 7,300 employees and 97 locations in twenty countries, will be headquartered in Wilmington, Massachusetts.