INVERESK Research, once hailed as Scotland's biggest home-grown medical science company, is to be sold to a US rival in a $1.5bn (£825m) cash- and-shares deal.
The agreement with Charles River Laboratories of Massachusetts, which raises mice and rats for medical testing, will mark the final stage in Inveresk's transition into a wholly US-owned business. Inveresk, which employs about 900 people in Scotland, has been listed on the Nasdaq exchange in the US since 2002.
The deal will also signal a further windfall for Inveresk's founder, Walter Nimmo, who set up the business in Edinburgh in 1988. He is thought to retain a 3.6% stake in the operation, which would be be worth nearly £30m.
The board of directors at both companies have approved the deal, which is expected to be finalised in the fourth quarter of this year. Inveresk investors will receive 0.48 share of Charles River common stock, plus $15.15 (£8.32) cash, for each Inveresk share they own.
Nimmo will become vice-chairman and chief scientific officer of the enlarged business, which will employ about 73,000 people world-wide.
Brian Bathgate, a graduate of the University of Glasgow, will continue as the head of European pre-clinical operations for the enlarged operation. Likewise, Alistair McEwan – a University of Edinburgh graduate and ICAS-qualified accountant – will continue as head of global clinical operations.
The Scottish operations of Inveresk, which are spread across three sites in Edinburgh, are involved in both pre-clinical and clinical trials of new medical treatments on behalf of large pharmaceutical and biotechnology companies. No redundancies are expected among the approximately 2600 staff employed by Inveresk world-wide.
Because its business involves testing on live animals, Inveresk has traditionally been a low-profile operation. Fear of reprisals from animal rights groups is believed to be one of the reasons the company chose to list in the US rather than the UK.
After its establishment 16 years ago, Inveresk was acquired by SGS in 1993. With help from venture capitalists Candover, the management team bought back the business from its Swiss owners in 1999. They then went on to purchase the US and Canadian testing group ClinTrials for £79m in 2001.
Inveresk was listed on Nasdaq a year later, and a few months after that Nimmo was named Scottish entrepreneur of the year by the Entrepreneurial Exchange. This was capped off by Inveresk's 2003 acquisition of PharmaResearch of the US for £23m.
In the first quarter of this year, Inveresk reported record revenues of $76.7m (£42.1m), an increase of 33% on the same period a year earlier. The takeover agreement with Charles River comes as drug companies have been boosting R&D spending in an effort to replenish diminishing drug pipelines.
KRISTY DORSEY, Deputy Business Editor July 02 2004