Charles River spends $212M to beef up its microbial testing

Preclinical CRO Charles River Laboratories ($CRL) is paying $212 million in cash to buy a company focused on quality-control testing, expanding its presence in the market for bacterial detection services.

Through the deal, Charles River is absorbing Celsis, a Chicago-headquartered company that tests drugs and consumer products for contamination before they ship out. Celsis works with pharma, beauty companies and the food industry, touting itself as a provider of speedy tests that allow its clients to quickly get their products onto the market.

For Charles River, the buyout builds on its recent efforts to expand its endotoxin and microbial detection (EMD) division, which to this point been focused on sterile biopharma products alone. Adding Celsis to the fold, the CRO can now capitalize on demand across multiple industries, Charles River CEO James Foster said.

"The acquisition nearly doubles the market opportunity for EMD testing products and services, offering access to the consumer products market in addition to our core biopharmaceutical market," Foster said in a statement. "Celsis' robust financial profile enhances the EMD business, which is our highest-growth and one of our highest-margin businesses."

The CRO expects Celsis' revenue to grow in the low double digits each year, adding about 1% to Charles River's 2015 revenue and about 2.5% next year. Management figures it can save about $2 million in 2016 after integrating its latest acquisition.

Last quarter, Charles River cleared $320.4 million in revenue, a 7% increase over the same period in 2014. The company is forecasting full-year growth of between 6.5% and 8% at constant currency, but the strength of the dollar boils that down to 1% to 2.5% over 2014.

- read the statement