Charles River Laboratories International, Inc. · NYSE:CRL
Charles River Laboratories International — Merger or Acquisition (June 2010)
31 slides from Charles River Laboratories International's merger presentation, Jun 1, 2010
Slide 1: Safe Harbor Statement
Safe Harbor Statement This document 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," "estimate," "plan," "outlook," and "proj
Slide 2: Non-GAAP Financial Measures and Additional Information
Non-GAAP Financial Measures This presentation includes discussion of non-GAAP financial measures. We believe that the inclusion of these non-GAAP financial measures provides useful information to allow investors to gain a meaningful understanding of our core operating results and future prospects, w
Slide 3: Charles River and WuXi: A Transformational Combination
Charles River and WuXi: A Transformational Combination [] The combination creates the first fully integrated global early-stage contract research organization (CRO) * Offers a full range of products and services from molecule creation to first-in-human testing * Leverages increasing strategic import
Slide 4: Timing of the Acquisition is Key
Timing of the Acquisition is Key [] Critical inflection point in terms of rapid client consolidation and infrastructure reductions * Accelerating need for strategic outsourcing [] Clients are reducing the number of strategic partners to those with financial strength, scientific depth, global footpri
Slide 5: Drives Profitable Revenue Growth
Drives Profitable Revenue Growth [] Global outsourced discovery chemistry segment is estimated to be at least $2B in 2010, with a mid-teens CAGR over the next 3-5 years* * Currently ~20-30% outsourced [] Growth in Discovery Chemistry and other downstream services accelerated by pharma outsourcing *
Slide 6: Enhances Top-Line Growth Potential by BPS
Enhances Top-Line Growth Potential by 200 BPS '11-'13E Growth Potential Growth Drivers - -------------------------------------------------------------------------------- [] Improved demand for models used in toxicology [] Standard ~2% average annual price increase [] Continued double-digit growth of
Slide 7: Revenue Synergies
Revenue Synergies [] Cross-selling and combined sales force create incremental opportunity to drive more business upstream and downstream with existing and prospective clients based on unprecedented scope of early-stage portfolio [] Increased presence and scale in the emerging China market [] Mid-ti
Slide 8: Significant Cross-Selling Opportunities
Significant Cross-Selling Opportunities CRL WX Combined Top 20 Clients ('09) Rank Rank - -------------------------------------------------------------------------------- 1 Large Pharma Top 10 Top 5 Each Top 3 client 2 Large Pharma Top 5 Top 10 ----------------- 3 Large Pharma Top 5 Top 5 5%-6% of co
Slide 9: 2011 Combined Financial Outlook
2011 Combined Financial Outlook(1) - -------------------------------------------------------------------------------- Revenue(2) At least $1,675M - -------------------------------------------------------------------------------- Non-GAAP Operating Margin % Approx. 22% - -----------------------------
Slide 10: 2011 General Assumptions
2011 General Assumptions(1) [] Expect to recognize ~$20M of cost synergies * Public company costs, SG-and-A, and refinement of operating structure [] ~4.5% average interest rate on new debt * Term A rate expected to be LIBOR plus 275bps [] New debt of less than $950M [] Existing term loan is repaid
Slide 11: Enthusiastic Client Response
Enthusiastic Client Response [] Senior management of CRL and WX each have reviewed the transaction with their respective top 20 pharmaceutical and biotechnology clients * Response has been overwhelmingly positive * Follow-up meetings have been scheduled/initiated [] Clients are viewing this transfor
Slide 12: Cultural Fit
Cultural Fit [] WuXi is a client-focused service organization* Excellent client retention [] 100% retention of top 10 clients ('07-'09) * ~90% of WuXi's sales generated from US and European clients [] WuXi shares CRL's employee-centric culture [] Scientific depth and expertise differentiates CRL and
Slide 13: Management Continuity
Management Continuity [] Top WuXi executives to join CRL management team (3-year employment agreements) * Ge Li, PhD: Corporate EVP and President, Global Discovery and China Services o Joins CRL Board, along with two additional directors chosen by WuXi o Founded WuXi in 2000; previously helped found
Slide 14: Integration Planning Well Underway
Integration Planning Well Underway [] Minimal business overlap simplifies integration process [] Corporate integration team jointly headed by: * CRL: David P. Johst, EVP, Human Resources, General Counsel and CAO * WX: Edward Hu, COO [] Nine operational sub-teams already established and meeting to de
Slide 15: Transaction Timeline
Transaction Timeline [] HSR filed May 11, 2010 [] Preliminary proxy statement filed June 1, 2010 [] Still on track to close by 4Q10, subject to approval by each company's shareholders and the satisfaction of customary closing conditions and regulatory approvals * Shareholder approval process: o SEC
Slide 16: A Transformational Combination
A Transformational Combination [] First fully integrated global early-stage CRO [] Overwhelmingly positive response from top 20 clients [] Creates opportunities for substantial revenue synergies due to unique portfolio and global footprint [] Generates profitable revenue growth, driving long-term re
Slide 17: A Transformational Combination
A Transformational Combination Vv First fully integrated global early-stage CRO Overwhelmingly positive response from top 20 clients Creates opportunities for substantial revenue synergies due to unique portfolio and global footprint Generates profitable revenue growth, driving long-term return on i
Slide 18: Transaction Summary
Transaction Summary Purchase price [] ~$1.6B(1), including the assumption of WuXi's debt and cash Consideration [] $21.25(1) total per ADS subject to collar (below) per share [] $11.25 in cash plus [] $10.00 of CRL common stock determined by exchange ratio Exchange Ratio [] $10.00 divided by 20-day
Slide 19: Charles River Today
Charles River Today [] A leading in vivo biology company * $1.20B in net sales (FY '09) [] Unique portfolio of products and services focused on the research and development continuum for new drugs [] A multinational company with ~8,000 employees worldwide * ~70 facilities in 16 countries o Continuou
Slide 20: WuXi Today
WuXi Today [] A leading chemistry company * $270M in net sales (FY09) [] Service portfolio supports clients early with molecule creation, extending downstream through laboratory and manufacturing services [] Largest China-based CRO with ~4,200 employees worldwide * One of the largest employers of ch
Slide 21: WuXi Overview
WuXi Overview Headquarters [] Shanghai, China - -------------------------------------------------------------------------------- [] Laboratory services, consisting of synthetic and medicinal chemistry, DMPK/ADME, biology, microbiology, in vivo pharmacology, toxicology, pharmaceutical development, an
Slide 22: WuXi Overview - History
WuXi Overview - History [GRAPHIC OMITTED] Source: Based on WuXi's information as disclosed in its Form 20-F filed with the SEC on 04/23/2010 and other public documents. 23
Slide 23: WuXi's Current Discovery Services
WuXi's Current Discovery Services [GRAPHIC OMITTED] 24
Slide 24: CRL's Current Preclinical Services
CRL's Current Preclinical Services [GRAPHIC OMITTED] 25
Slide 25: The New CRL: Global Integrated Services
The New CRL: Global Integrated Services [GRAPHIC OMITTED] 26
Slide 26: Leverages Increasing Strategic Importance of China
Leverages Increasing Strategic Importance of China [] Supportive of global pharmas who view China as the new frontier for drug development [] Pharmas are taking advantage of cost leverage by placing chemistry in China * Lower cost, highly skilled scientists with advanced degrees [] Emerging opportun
Slide 27: The New CRL Revenue Base
The New CRL Revenue Base* [GRAPHIC OMITTED] - -------------------------------------------------------------------------------- Leveraging the increasing strategic importance of China - -------------------------------------------------------------------------------- * Based on FY 2009 combined sales.
Slide 28: The New CRL Business Segments
The New CRL Business Segments - -------------------------------------------------------------------------------- 2009 Combined Sales*: $1.5B - -------------------------------------------------------------------------------- [GRAPHIC OMITTED] DS: Discovery Services RMS: Research Models and Services P
Slide 29: Synergies
Synergies - -------------------------------------------------------------------------------- Public company [] Reduction of Board, SOX, audit, legal, stock and corporate exchange, insurance and related expenses [] Elimination of duplicative corporate overhead ~1/4 of cost synergies expenses and supp
Slide 30: Accelerating Drug Development. Exactly.
- -------------------------------------------------------------------------------- Accelerating Drug Development. Exactly. - -------------------------------------------------------------------------------- CRL ------ LISTED ------ NYSE [C] 2010 Charles River Laboratories International, Inc. 31
Slide 31: Accelerating Drug Development. Exactly.
Accelerating Drug Development. Exactly. CRL NYSE. — © 2010 Chares River Laboratories Iternatona, nc charles river
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