The shareholders basically said stay here and fix the business in the US rather than risk deals overseas. This is a nice turn about from what we have been hearing in the news of late. The debt ratio here was way out of hand too with being extended farther than what the board felt comfortable with.
Perhaps we may be seeing the start of investing in American companies just starting to make a tiny impact when we need it the most. Below is a paragraph from my original post when the acquisition was announced. BD
The entire deal is slated to finish by the 4th Quarter. Charles River is located in Massachusetts and WuXi in Shanghai, China. WuXi acquired App Tec in St. Paul in 2008, so that helps explain the names. The company already has several other international locations in the world. This is a big move for additional research and development to be done in China, outsourcing.
In the face of insurmountable shareholder opposition, Charles River Laboratories International has agreed to terminate its $1.6 billion proposed takeover of WuXi PharmaTech, a Chinese drug research and development outsourcing company.
Charles River will pay WuXi a $30 million breakup for the privilege, $5 million more than was called for under the merger agreement if the American company’s shareholders voted down the transaction. Still, this expense is probably worth it, avoiding what would have been an uncomfortable shareholder meeting.
Charles River’s experience provides some lessons for buyers in this post-crisis market for mergers and acquisitions.