BURLINGTON – Hundreds of employees will be swapping companies as part of a $485 million deal life science giant LabCorp is making with privately held Envigo, a research firm.
LabCorp will add some 1,400 employees to its Covance Drug Development firm.
At the same time an unspecified number of Covance employees will become part of Envigo, which is based in New Jersey and the United Kingdom.
The deal, which still faces regulatory approval, involves the swap of Convance’s Research Products business for Envigo’s nonclinical research business.
Convance employees involved in the move to Envigo are based in the US, LabCorp noted in the announcement.
LabCorp acquired Covance in 2014 for some $14 billion, vastly expanding the firm beyond its traditional services of laboratory testing.
LabCorp and Envigo also struck a multi-year “strategic supply collaboration” as part of the deal, said Envigo CEO Adrian Hardy. Financial terms of that deal were not disclosed.
The deal includes $485 million “cash consideration” from LabCorp.
In explaining, the deal, LabCorp chair and CEO David King explained it this way:
“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. 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 deal, which was announced after the markets closed Wednesday, is expected to be formalized within two months, according to LabCorp.
LabCorp (NYSE” LH) shares traded up some 80 cents Thursday at $144.99 just before the markets closed.
Deal key points
LabCorp said the deal has multiple areas of importance to its Covance group:
- “The divestiture of Covance Research Products through this transaction simplifies and focuses the Covance Drug Development nonclinical research business model.
- “The infusion of additional scientific and technical expertise and industry insight from Envigo will enable Covance to enhance its nonclinical capabilities, including respiratory, with additional facilities in Europe and the U.S. to meet growing client needs.
- “The combined Covance nonclinical research business will increase its employee base by nearly one-third, to approximately 4,200 employees globally.
- “Creates a comprehensive research models and services business.”