Commerce & Finance and O'Melveny & Myers along with co-counsel Cravath, Swaine & Moore, have recently acted for WuXi PharmaTech in its proposed sale to Charles River Laboratories International, a global provider of research models and preclinical drug development services. Charles River was advised by Fangda and Davis Polk. In facilitation of the acquisition, Davis Polk also advised Charles River on a US$1.25bn financing commitment from JP Morgan Chase and Merrill Lynch.

Under the terms of the transaction, Charles River will acquire WuXi in a cash and stock transaction valued at approximately US$1.6bn. The transaction represents one of the largest foreign takeovers of a Chinese company. 

O’Melveny has been a trusted advisor to WuXi for several years. “We have advised Wuxi in numerous matters, including its US$55m Series C financing and US$40m convertible notes offering, as well as its US$212m IPO on the New York Stock Exchange in 2007,” said Kurt Berney, O’Melveny’s lead partner on the deal.

The combination of Charles River and Wuxi is seen to likely put pressure on other contract research organisations (CROs) focusing on Asia, and this could create more work for firms. “Asia is a strategic growth area for the CRO sector. Given that it can take over a billion dollars and ten or more years to develop new drugs, you are seeing global drug companies move some of their R&D operations to Asia and to companies like WuXi in order to reduce both costs and the time required to bring new drugs to market,” said Berney.

The transaction, which is expected to close by the fourth quarter of 2010, is subject to approval by each company’s stockholders and the satisfaction of customary closing conditions and regulatory approvals.

JP Morgan is acting as financial advisor to Charles River and Credit Suisse is acting as exclusive financial advisor to WuXi PharmaTech.