Grifols, Europe’s largest maker of blood-plasma products, is going global after agreeing to buy the USA’s Talecris Biotherapeutics for $3.40 billion, plus $600 million in debt.
Under the terms of the deal, the Spanish firm will acquire all of the common stock of Talecris for $19.00 in cash and 0.641 newly-issued non-voting Grifols' shares, representing an implied price of $26.16 per share. This constitutes a premium of 53% to the average closing price of Talecris common stock over the last 30 days.
The Barcelona-headquartered firm said the acquisition is expected to generate $230 million in operating synergies “from a more efficient plasma collection network, optimised manufacturing sales, marketing and R&D” over the next four years with an associated one-time cost of $100 million. The transaction is expected to be accretive to earnings in the first year “and produce meaningful accretion from year two”.
The combined company will have pro forma annual revenues of $2.80 billion with 58% coming from North America, 28% from Europe and 14% from the rest of the world. It will have “the ability to derive more protein therapies from every litre of plasma” and “an established plasma collection operation capable of meeting the combined company's needs to address increasing patient demand and an accelerated path to improving the cost efficiency of the Talecris plasma platform”.
Grifols added that it will also have “a broad range of key products addressing a variety of therapeutic areas such as neurology, immunology, pulmonology and haematology, among others”. It will also have an enhanced R&D pipeline of complementary products and new recombinant projects and “a well established clinical research programme in the USA”.
The deal gives Grifols almost a third of the $7 billion US market for blood-based infusions, matching Baxter International and beating Australia’s CSL’s 29% stake, said Andrew Goodsall, an analyst with UBS and quoted by Reuters. Talecris had agreed to merge with CSL in 2008 in a proposed $3.10 billion deal but called it off in June last year in the face of the US Federal Trade Commission's determination to block the deal.
The FTC had claimed that the Talecris/CSL deal would be illegal and filed a lawsuit to stop the deal. However Grifols believes that it will not have to make any divestments to satisfy the antitrust agency.
Financing for the deal “is fully committed by a syndicate led by Deutsche Bank, Nomura, BBVA, BNP Paribas, HSBC and Morgan Stanley,” Grifols said, but investors seem a bit concerned about the price being paid. The Spanish firm’s shares were down 4.9% at 10am (UK time) at 8.84 euros.
One group that is very happy with the deal is Cerberus Capital Management. Talecris was formed in 2005 when Cerberus, along with private-equity firm Ampersand Ventures, paid around $450 million for the blood plasma unit of Bayer and in October last year, after the collapse of the CSL merger, Talecris raised $950 million in an initial public offering. However Cerberus still holds around a 49% stake so could make around $2 billion from the sale to Grifols.