LabCorp announced Thursday a pair of deals in which its Covance Drug Development segment will buy East Millstone-based Envigo‘s nonclinical research service business, while Envigo’s Research Models Services business will buy the Covance Research Products business.
LabCorp, which is based in Burlington, North Carolina, said it will pay net consideration of $485 million between the deals, which are intended to expand Convance’s nonclinical drug development capabilities and reposition Envigo as a pure-play research model and service business.
“This unique transaction is part of our strategy to transform drug development, strengthening Covance’s ability to offer comprehensive global nonclinical research services to the biopharma industry,” David P. King, chairman and CEO of LabCorp, said. “Together, we are taking a creative and collaborative approach to early-stage research, which demonstrates LabCorp’s commitment to providing clients with innovative solutions that will ultimately improve health and improve lives.”
The deals are expected to close within the next two months, LabCorp said.
LabCorp’s divestiture from Covance Research Products, it said, will simplify and focus its Covance Drug Development nonclinical research business model. Also, adding Envigo’s scientific and technical expertise will enhance its nonclinical capabilities, including respiratory, with additional facilities in Europe and the U.S. to meet growing client needs.
“This landmark agreement will provide an enhanced experience to our valued customers across both segments of our company and closely aligns with our vision to work together to build a healthier and safer world,” Dr. Adrian Hardy, CEO and president of Envigo, said. “We are excited to welcome the team members who will be joining our expanded research models and services entity and for our colleagues who will become important contributors to one of the world’s most innovative and respected contract research organizations. As a result of the multi-year strategic supply collaboration, we look forward to partnering with our colleagues at Covance to advance critical, life-enhancing research.”
The deals are expected to add an incremental $156 million to LabCorp’s revenues on a pro forma 2018 basis, it said.
LabCorp also said its Covance nonclinical research business will increase its workforce by nearly a third, to 4,200 globally.
Goldman Sachs & Co. LLC is serving as financial adviser and Hogan Lovells US LLP is serving as legal counsel to LabCorp. Wells Fargo Securities LLC is serving as financial adviser and Cahill Gordon & Reindel LLP is serving as legal counsel to Envigo.