In this interview, WuXi PharmaTech CEO Dr. Ge Li discusses the proposed $1.6 billion acquisition by Charles River Laboratories. He frames the deal as a transformative, end‑to‑end CRO partnership that will combine Charles River’s strength in early development with WuXi’s capabilities in early discovery, creating the only company able to offer services from compound synthesis through first‑in‑human Phase I trials. Li highlights the financial upside for shareholders, noting a 28 % premium to the last Friday price and a 38 % premium to the 30‑day average, and mentions that shareholders will receive stock in the combined entity. He expects the transaction to close in the fourth quarter of the year, pending SEC and shareholder approvals. When asked about animal‑testing regulations and whether lower thresholds in mainland China influence the deal, Li dismisses the notion, emphasizing the strategic service breadth instead. He also addresses questions about RMB revaluation, stating that currency considerations will be evaluated as needed but the focus remains on delivering high‑quality services. Throughout, Li conveys confidence that the merger will create long‑term value for shareholders, employees, and customers.
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We have Wuxi Pharma Texas CEO Dr. Gu Li joining us on the line this morning from Princeton, New Jersey. And Dr. Li, nice to have you with us. You heard Paul Gordon there. I hope you did. It looks like the share price reaction looks like investors in Charles River not approving of this transaction. What's your reaction?
Well, I think, you know, this deal is a transformation deal. The combined company will offer a much broader service to, you know, our partners and namely, mainly pharmaceutical, biotech, and medical device companies in US, Europe, and Japan. And Charles River is strong in early development, and WuXi has built its own name and strong in early discovery. So the combined company will be one of the only companies in the CRO industry which can provide services from compound synthesis all the way to you know, first phase 1 human clinical trials. So this combined, you know, company will transform how future R&D services will be done.
Okay, Dr. Li, let me talk to you about this deal. $1.6 billion is the price tag, but you have Charles River having to borrow $1.25 billion of that cash. I mean, are there any concerns here? Why did you decide to accept it?
Well, I don't know. You know, what do you mean? Concern? We have no concern. I think, you know, this deal will provide, you know, very good value, you know, for our shareholders and most importantly, and very good value for, you know, our employees and, you know, our customers. So, you know, it's a deal with the consideration of near-term and long-term. All shareholders is getting a 28% premium for last Friday's price and a 38% premium for the last 30 days stock price. And, you know, all shareholders also getting, you know, the stock of a combined company. And we all believe the combined company will continue to drive, you know, the value for our shareholders for long term.
Yeah. And Dr. Lee, when do you expect this deal to close?
Well, you know, we, we think, you know, probably it will be in the fourth quarter of this year.
Okay. Probably in the fourth quarter sometime. Let me ask you, how come it's taken this long for a foreign company to actually buy into a Chinese company? Because, you know, we've had thwarted deals from private equity firms such as Carlyle, also Coca-Cola trying to buy Huayuan Juice. Why has it taken this long for Charles River to finally get their hands on a Chinese company?
No, I think this is normal course, right? Because, you know, we need to get SEC approval and also we need to get approval from shareholders of both companies.
Okay. Well, let me just ask you, we were just talking with Paul Gordon about basically it seems like animal rights and animal testing, the laws against this is probably— there's a lower threshold on the mainland. Do you think that's true? Is that one of the reasons why Charles River wants to buy into Wuxi PharmaTech?
No, no. I think, you know, the significance of this deal is that the combined company will offer much broader services to our customers. And as I said earlier, we— the combined company will be the only one company which can offer our customers from compound synthesis to first-in-man and Phase 1 human clinical trials.
Okay. And Dr. Li, one more question before we go. You know, there's a lot of debate about whether or not China should revalue the RMB, the currency at this point. Would a stronger RMB help you with WuXi PharmaTech? Would you like to see a stronger currency?
Well, I think, you know, again, you know, the currency, you know, will evaluate if it needs to be, because, you know, I think the combined economy and WuXi We'll focus on providing high-quality services to our partners.
Okay, Dr. Gurley, thank you so much for your time. The price. Okay. The quality does have a price. That's a good point. Thank you for that. Dr. Gurley is the CEO of Wuxi PharmaTech, which is part of this deal. In fact, the biggest foreign takeover of a Chinese company ever. $1.6 billion is the price tag.
