LabCorp to purchase Envigo’s nonclinical contract research services business

LabCorp’s Covance Drug Development segment will acquire Envigo’s nonclinical research services business and Envigo’s Research Models Services business will acquire the Covance Research Products business. This will result in Envigo becoming a pure-play research models and services business, while Covance will expand its global nonclinical drug development capabilities. The proposed transactions are subject to labor consultations, regulatory approvals and customary closing conditions, and are expected to close within two months. Covance and the new Envigo research models and services entity will enter into a multi-year renewable supply agreement. The proposed transactions will result in net implied cash consideration to be paid by LabCorp of $485M. The net impact of the proposed transactions will be an incremental $156M in LabCorp’s revenues on a pro forma 2018 basis. The proposed transactions are expected to meet LabCorp’s financial criteria of earnings and cash accretion in year one and exceeding the cost of capital by year three.

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