Shareholder opposition has forced Charles River to call off its $1.6 billion plan to purchase China's WuXi PharmaTech. Despite CEO James Foster's assurances that the deal would bring up to $100 million in potential operational savings, several investors were never able to overcome their concerns that the deal wasn't in the company's best interests. Charles River has been expanding its Chinese operations for the past several years and had hoped to increase the size of its footprint in China with the WuXi deal.
Investors Jana Partners, Relational Investors and Neuberger Berman were among the firms concerned that Charles River was overpaying for the Chinese CRO, and that the company would face significant challenges integrating the two businesses. The termination agreement provides for Charles River to pay WuXi a $30 million breakup fee. Additionally, the company announced that its board of directors has authorized the repurchase of up to $500 million of Charles River stock.
"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," said James in a statement. "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."
- see Charles River's release
- here's the WSJ report