Charles River Laboratories Signs Binding Offer to Acquire Citoxlab

– Further Strengthens Charles River’s Position as the Leading Global
Early-Stage CRO –

– Transaction Expected to be Accretive to Non-GAAP EPS by
Approximately $0.15 in 2019 and At Least $0.35 in 2020 –

WILMINGTON, Mass.–(BUSINESS WIRE)–Charles River Laboratories International, Inc. (NYSE: CRL) announced
today that it has signed a binding offer to acquire Citoxlab for €448
million in cash (or approximately $510 million based on current exchange
rates), subject to customary closing adjustments. The proposed
transaction is expected to close in the second quarter of 2019, subject
to labor consultations, regulatory requirements, and customary closing
conditions. Upon completion of the labor consultations, Citoxlab’s
shareholders are expected to enter into a definitive purchase agreement.

Citoxlab is a premier, non-clinical contract research organization
(CRO), specializing in regulated safety assessment services,
non-regulated discovery services, and medical device testing. With
operations in Europe and North America, the proposed acquisition of
Citoxlab would further strengthen Charles River’s position as the
leading, global, early-stage CRO by expanding its scientific portfolio
and geographic footprint, which would enhance the Company’s ability to
partner with clients across the drug discovery and development continuum.

James C. Foster, Chairman, President and Chief Executive Officer of
Charles River Laboratories, commented, “The proposed acquisition of
Citoxlab would expand and solidify Charles River’s position as the
partner of choice for our clients’ early-stage research needs, at a time
when we believe there continues to be significant demand for outsourced
services from both biotechnology and pharmaceutical companies. Citoxlab
would be an exceptional strategic fit for Charles River because it
incorporates the key attributes we require in an acquisition: scientific
expertise, complementary capabilities, talented people, and access to
growing end markets. The proposed acquisition would also enhance our
geographic footprint, particularly in Europe, and our access to a
growing biotechnology client base, enabling Charles River to provide a
broader range of services proximate to our clients – both large and
small.”

“In addition to enhancing our value proposition for clients and meeting
our disciplined acquisition criteria, we believe that the proposed
acquisition of Citoxlab would generate value for shareholders, driving
profitable revenue growth and non-GAAP earnings per share accretion of
approximately $0.15 in 2019 and at least $0.35 in 2020. We greatly
respect and are committed to Citoxlab’s employees, its scientific
capabilities, and the reputation it has built over 50 years since its
founding, and look forward to welcoming Citoxlab to the Charles River
family,” Mr. Foster concluded.

Jean-François Le Bigot, Ph.D., Chairman and Chief Executive Officer of
Citoxlab, added, “Becoming part of the Charles River family would be a
significant achievement and recognition of the accomplishments of
Citoxlab and our dedicated team. After many years of growth, I am very
pleased and excited to embark on a new era for Citoxlab. I am confident
that Charles River is committed to our global employees and advancing
our mission through our extensive scientific capabilities. At a time
when new drug approvals are at record levels and the complexity of each
drug candidate is increasing, we believe the collaboration of our
respective scientific teams, the implementation of best practices, and
the synergies between the early-stage services offered by Charles River
and Citoxlab would represent a significant growth opportunity for both
organizations, and also enhance the value that we provide to all of our
clients to meet their individual needs.”

Strategic Rationale

The proposed acquisition of Citoxlab would strengthen Charles River’s
presence in growing end markets, enhance its global scale and geographic
footprint, and augment its scientific capabilities, providing a
compelling value proposition for both clients and shareholders.

  • Strengthens service portfolio – Citoxlab provides a
    broad suite of early-stage services that would strengthen Charles
    River’s existing capabilities in four key areas:

    • General and specialty toxicology, including developmental and
      reproductive toxicology and ocular services, as well as
      agricultural and industrial chemical testing, including
      ecotoxicology services;
    • Preclinical medical device testing services, significantly
      enhancing Charles River’s existing expertise;
    • Non-regulated discovery solutions, ranging from traditional DMPK
      services to drug transporter and drug-to-drug interaction
      research; and
    • Genomics research, adding unique expertise to Charles River’s
      capabilities in mechanistic and investigative toxicology.
  • Enhances global scale to meet growing demand – The
    proposed acquisition would enhance Charles River’s presence in Europe,
    particularly in Eastern Europe. Citoxlab has nine operating sites in
    six countries in Europe and North America, with global capacity
    totaling over 700,000 square feet.
  • Expands client base – Citoxlab has a diverse client base
    of biopharmaceutical, agriculture and industrial chemical, and medical
    device companies worldwide. Specifically, the proposed acquisition
    would further expand Charles River’s small and mid-sized biotechnology
    client base, its fastest-growing client segment.
  • Compelling financial profile The addition of Citoxlab
    would enhance Charles River’s ability to achieve its long-term
    financial goals. The proposed acquisition is also expected to generate
    attractive returns on capital through profitable revenue growth and
    meaningful accretion to non-GAAP earnings per share.

Additional Financial and Transaction Details

The purchase price implies multiples of 13.8x non-GAAP EBITDA based on
Citoxlab’s estimated last twelve-month results prior to the anticipated
close, and approximately 11.7x non-GAAP EBITDA based on the estimated
forward twelve-month results after the anticipated close.

The proposed acquisition is expected to add $115 to $130 million to
Charles River’s 2019 consolidated revenue based on the anticipated
second-quarter close, and approximately $200 million to 2020
consolidated revenue. Citoxlab’s revenue is expected to grow at a
high-single-digit rate, which is consistent with the long-term organic
revenue growth target for Charles River’s Discovery and Safety
Assessment (DSA) segment. Citoxlab is expected to be reported as part of
Charles River’s DSA segment.

The proposed transaction is expected to be accretive to non-GAAP
earnings per share by approximately $0.15 in 2019 and at least $0.35 in
2020. Items excluded from non-GAAP earnings per share are expected to
include all acquisition-related costs, which primarily include
amortization of intangible assets, advisory fees, and integration costs.

The proposed acquisition and associated fees are expected to be financed
through Charles River’s existing revolving credit facility and cash.

Evercore is acting as the exclusive financial advisor to Charles River.
Darrois Villey Maillot Brochier is acting as Charles River’s
transactional legal counsel and Axinn, Veltrop & Harkrider LLP is acting
as antitrust counsel. Goodwin Procter LLP is acting as Citoxlab’s
transactional legal counsel.

Webcast

Charles River Laboratories has scheduled a live webcast on Wednesday,
February 13th, at 8:30 a.m. EST to discuss its fourth-quarter
earnings, 2019 guidance, and matters relating to this news release. To
participate, please go to ir.criver.com
and select the webcast link. You can also find the associated slide
presentation on the website.

Use of Non-GAAP Financial Measures

This news release contains non-GAAP financial measures, such as non-GAAP
earnings per diluted share, which exclude the amortization of intangible
assets, integration costs, advisory fees, and other charges related to
our acquisitions and expenses associated with evaluating acquisitions.
We exclude these items from the non-GAAP financial measures because they
are outside our normal operations. This news release also refers to our
revenue in both a GAAP and non-GAAP (constant currency) basis. There are
limitations in using non-GAAP financial measures, as they are not
prepared in accordance with generally accepted accounting principles,
and may be different than non-GAAP financial measures used by other
companies. In particular, we believe that the inclusion of supplementary
non-GAAP financial measures in this news release helps investors to gain
a meaningful understanding of our core operating results and future
prospects without the effect of these often-one-time charges, and is
consistent with how management measures and forecasts the Company’s
performance, especially when comparing such results to prior periods or
forecasts. We believe that the financial impact of our acquisitions (and
in certain cases, the evaluation of such acquisitions, whether or not
ultimately consummated) is often large relative to our overall financial
performance, which can adversely affect the comparability of our results
on a period-to-period basis. In addition, certain activities, such as
business acquisitions, happen irregularly and the underlying costs
associated with such activities do not recur on a consistent basis.
Presenting revenue on a constant-currency basis allows investors to
measure our revenue growth exclusive of foreign currency exchange
fluctuations more clearly. Non-GAAP results also allow investors to
compare the Company’s operations against the financial results of other
companies in the industry who similarly provide non-GAAP results. The
non-GAAP financial measures included in this news release are not meant
to be considered superior to or a substitute for results of operations
prepared in accordance with GAAP. The Company intends to continue to
periodically assess the potential value of reporting non-GAAP results
consistent with applicable rules and regulations. A reconciliation of
the effect of this transaction on non-GAAP earnings per share for 2019
and 2020 to the most directly comparable GAAP financial measure has not
been included because it is impracticable to determine the allocation of
the purchase price for the proposed acquisition and other necessary
adjustments at this time.

Caution Concerning Forward-Looking Statements

This news release includes forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements may be identified by the use of words such as “anticipate,”
“believe,” “expect,” “will,” “would,” “may,” “estimate,” “plan,”
“outlook,” and “project” and other similar expressions that predict or
indicate future events or trends or that are not statements of
historical matters. Forward-looking statements include statements in
this news release regarding the proposed acquisition of Citoxlab,
expectations regarding the timing of the closing of the proposed
acquisition, and Charles River’s expectations with respect to the impact
of Citoxlab on the Company, its service offerings, client perception,
revenue, revenue growth rates, and earnings; Citoxlab’s final 2018
financial results; Charles River’s projected future performance
including revenue and earnings per share; as well as Charles River’s
future growth in the area of safety assessment. Forward-looking
statements are based on Charles River’s current expectations and
beliefs, and involve a number of risks and uncertainties that are
difficult to predict and that could cause actual results to differ
materially from those stated or implied by the forward-looking
statements. Those risks and uncertainties include, but are not limited
to, the ability to successfully complete the acquisition of Citoxlab. A
further description of these risks, uncertainties, and other matters can
be found in the Risk Factors detailed in Charles River’s Annual Report
on Form 10-K as filed on February 13, 2018, as well as other filings we
make with the Securities and Exchange Commission. Because
forward-looking statements involve risks and uncertainties, actual
results and events may differ materially from results and events
currently expected by Charles River, and Charles River assumes no
obligation and expressly disclaims any duty to update information
contained in this news release except as required by law.

About Charles River

Charles River provides essential products and services to help
pharmaceutical and biotechnology companies, government agencies and
leading academic institutions around the globe accelerate their research
and drug development efforts. Our dedicated employees are focused on
providing clients with exactly what they need to improve and expedite
the discovery, early-stage development and safe manufacture of new
therapies for the patients who need them. To learn more about our unique
portfolio and breadth of services, visit www.criver.com.

Contacts

Investor Contact:
Todd Spencer
Corporate Vice President,
Investor Relations
781.222.6455
todd.spencer@crl.com

Media Contact:
Amy Cianciaruso
Corporate Vice President,
Public Relations
781.222.6168
amy.cianciaruso@crl.com

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