Charles River Laboratories International Inc. (NYSE:CRL), fresh from the collapse of a proposed, $1.6 billion merger with WuXi PharmaTech (Cayman) Inc. (NYSE:WX), plans to accelerate a $300 million stock buyback and took out a $750 million credit line.
The Wilmington, Mass.-based contract research organization said the repurchasing plan will see it buy back 6 million shares initially, with the final number to be determined based on a discounted price based on its daily volume-weighted average price during a a six-month-or-less period as determined by Morgan Stanley & Co. Inc., which is brokering the buyback.
Charles River Labs said it will pay for the buyback using cash on hand and "available liquidity," which includes a new $750 million credit agreement. The new line consists of a $400 million term loan and a $350 million revolving credit facility.
The company spiked the WuXi merger in late July after running into a buzz saw of opposition from several institutional backers, who believed the deal was too pricey and would give WuXi a disproportionately large stake in the combined companies.
The failed merger only added to Charles River Labs’ woes during the second quarter, when it posted a 57.6 percent decline in profits on a 5.2 percent top-line slide and cut its sales and earnings forecast for the rest of the year.
CRL shares were trading at $29.06 in early-morning activity, up about 0.6 percent.
