Charles River to buy Galapagos drug service operations

BRUSSELS, March 13 Thu Mar 13, 2014 3:18am EDT

BRUSSELS, March 13 (Reuters) - Belgian biotechnology group Galapagos said on Thursday it had agreed to sell its drug discovery service businesses to Charles River Laboratories International for up to 134 million euros ($186.3 million).

Galapagos said in a statement that it would be selling BioFocus and Argenta, which provide drug research services for the likes of Boehringer Ingelheim and Genentech.

Charles River, which specialises in supplying laboratory services to the pharmaceutical industry, will pay Galapagos 129 million euros, with a further 5 million euros dependent on reaching a revenue target 12 months after the deal is closed.

Galapagos said the purchase price represented a multiple of about two times 2013 sales and 12 times adjusted core profit (EBITDA).

The Belgian company said that with the sale, expected to be closed early in the second quarter, it had revised its 2014 guidance.

It now expects full-year revenue of 125 million euros, from the 180 million euros it forecast last week, and year-end cash of 170 million euros.

Galapagos will retain three research and development sites in Belgium, France and the Netherlands, as well as its Fidelta, its fee-for-service operation based in Zagreb, Croatia.

It will focus on its own drug pipeline, including candidate treatments for rheumatoid arthritis, lupus and ulcerative colitis, most of them in alliance with big pharma companies such as GlaxoSmithKline, AbbVie and Janssen.

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