Life Sciences Research to Be Acquired in Going Private Transaction

Life Sciences Research, Inc. (LSR) announced Thursday that it has entered into a definitive merger agreement to be acquired by Lion Holdings, Inc., an entity controlled by LSR’s Chairman and Chief Executive Officer, Andrew Baker, for $8.50 per share in cash. Mr. Baker currently beneficially owns approximately 17.5% of the outstanding shares of LSR.

On our March 16, 2009 post, we specified that LSR was a special situations play with a high probability of realization. We also pointed out that this was not a long-term play, as its mediocre earnings power did not make it a long-term value candidate. We are now closing our position on LSR, for an absolute return of 20%.

Under the terms of the merger agreement, LSR stockholders, other than Mr. Baker and his affiliates, will receive $8.50 in cash for each outstanding share of LSR common stock, representing a premium of approximately 77 percent over LSR’s closing share price of $4.79 on March 3, 2009, the last trading day prior to public announcement of Mr. Baker’s initial March 3, 2009 proposal to acquire the Company for $7.50 per share. The $8.50 per share purchase price also represents a premium of 13% over Mr. Baker’s initial proposal, and a premium of 18% over LSR’s closing share price of $7.18 on July 8, 2009, the last full trading day prior to today’s announcement.

A Special Committee consisting of LSR’s independent directors was charged with evaluating strategic alternatives for the Company and unanimously recommended approval of the merger. Based upon this recommendation, LSR’s Board of Directors (with Andrew Baker and Brian Cass abstaining), approved the merger and resolved to recommend that LSR stockholders approve the merger.

Lion Holdings, Inc. has secured equity and debt financing commitments that provide for the necessary funds to consummate the transactions contemplated by the merger agreement. The transaction is expected to close in the fourth quarter of 2009 and is subject to certain closing conditions, including approval by LSR stockholders.

Disclosure: We do not have a position in LSR