Uh-oh. An "undisclosed suitor" or others may be in talks with Charles River Laboratories ($CRL) in a deal that could split the life sciences contract research organization in two, or sell off those pieces to others.
Both the Boston Globe and MarketWatch are reporting variations of the rumor. But Boston Business Journal discounts it.
According to William Blair & Co. analysts cited by MarketWatch, Charles River's research models and services unit would be separated from its preclinical services division in a buyout. The Globe story, citing news from DealReporter, takes the speculation one step further—Charles River could be sold off in pieces. Their short story cites brokerage firm Sterne, Agee & Leach' s speculation that models and services would be sold to a private equity firm, and the preclinical business would be sold to a life sciences company. Both media outlets also noted that Charles River reportedly wants $40 a share for the deal, 40% higher than its Monday closing price. (The CRO did not comment for either story.)
So if all of this is true, could another venerable Boston life science company be history, broken up for its valuable pieces? Perhaps. CROs such as Charles River clearly have value. As pharmaceutical companies such as Pfizer ($PFE) have slashed billions of dollars from their research and development budgets, contract research organizations are in increasing demand to fill the research void that Big Pharma cost-cutting has created.
On the other hand, not so fast. The Boston Business Journal posted a blog item, citing analysts at Leerink Swan as saying such a sale is unlikely. Leerink casts doubt on the idea, the BBJ notes, because the company "is too expensive for the likely contract research or life sciences tools buyers." The consultants also shrugged off the idea that the company would be attractive to a private equity firm because it has an absence of "opportunities for efficiencies."
The BBJ noted that the buyout rumor report sent Charles River's stock jumping more than 17%, after it lost more than 16% of its value in recent months.
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