Charles River Laboratories announced a $510 million purchase of the assets of K.F. (Cambodia) Ltd., a key supplier of non‑human primates. The deal is designed to give the company greater control over the supply of primates that feed its Discovery and Safety Assessment (DSA) segment, a core part of its drug‑development services. The transaction is expected to close early in the first quarter of 2026 and is projected to accrete non‑GAAP earnings per share by about $0.25 in 2026 and $0.60 in 2027, providing a clear upside to the company’s profitability.
The acquisition follows a period of regulatory scrutiny and supply‑chain disruptions. In 2023, Charles River suspended shipments from Cambodian primate suppliers after a U.S. Department of Justice investigation into alleged smuggling of wild‑caught macaques. By acquiring K.F., the company aims to eliminate reliance on third‑party suppliers, reduce the risk of future suspensions, and secure a stable, compliant source of primates for its global operations.
Financial context underscores the strategic value of the deal. In Q4 2024, Charles River reported a GAAP loss per share of $4.22 but a non‑GAAP EPS of $2.66, with full‑year 2024 non‑GAAP EPS at $10.32. The DSA segment’s GAAP operating margin fell from 20.2% in Q4 2023 to 10.4% in Q4 2024, largely due to lower sales volume and pricing pressure. The acquisition is expected to reverse this trend by cutting procurement costs and improving margin stability.
CEO James C. Foster emphasized the strategic intent: “Our acquisition of K.F. will strengthen our supply chain, reduce cost volatility, and support the continued growth of our DSA business. By integrating primate sourcing, we can better serve our clients and maintain our leadership in regulatory‑required drug development.” Foster also noted that the company remains optimistic about the biopharmaceutical demand environment, citing a recent uptick in net book‑to‑bill ratios for the DSA segment.
Analysts reacted positively to the announcement. Following the news, BofA Securities upgraded the company’s rating from Neutral to Buy, and Morgan Stanley initiated coverage with an Equal‑weight rating and a $185 price target. The market reaction reflects confidence that the acquisition will deliver the projected EPS accretion and mitigate supply‑chain headwinds that have previously constrained the company’s growth.
Overall, the deal positions Charles River to better manage its critical primate supply, improve cost efficiency, and enhance earnings quality, reinforcing its competitive stance in the drug‑development services market.
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