Charles River Labs trades higher after ending $1.6B agreement to buy WuXi PharmaTech

Ahead of the Bell: Charles River Labs rises

NEW YORK — Shares of Charles River Laboratories International Inc. rose in premarket trading Friday after the company said it was ending an agreement to buy WuXi PharmaTech Inc.

Charles River Labs is a medical research equipment and services company. It agreed to buy WuXi, a pharmaceutical outsourcing company based in China, on April 26. The deal was worth $1.6 billion in cash and stock, valuing WuXi at a hefty premium of $21.25 per share. Analysts were caught off guard and Charles River Labs shareholders never warmed to the proposed deal.

Charles River stock dropped 15.6 percent the day the acquisition was announced. In total the shares are down 19.7 percent since April 25.

The Wilmington, Mass., company cited investor concerns as the reason it did not go through with the deal. It said the companies agreed to end the sale.

Canceling the deal frees up money for Charles River Labs, and it will put some of that cash to use by repurchasing shares. The company said its board authorized a $500 million stock repurchase program.

In premarket trading, Charles River Labs stock rose $1.70, or 5.3 percent, to $33.65.

WuXi shares have slumped in recent weeks. They jumped 17.1 percent on news of the deal, but since April 26 they are down 22.7 percent. In premarket trading, the stock lost 35 cents, or 2.3 percent, to $14.65.