Grifols To Pay $3.4B In Cash, Shares For Talecrishttp://online.wsj.com/article/BT-CO-20100607-707679.html?mod=WSJ_latestheadlines
By Ana Garcia Of EFE DOW JONES
MADRID (Dow Jones)--Spain's Grifols SA (GRF.MC) said Monday it has reached an agreement to buy Talecris Biotherapeutics Holdings Corp. (TLCR) of the U.S. for $3.4 billion in a deal that would make it the world's third-largest plasma-products manufacturer behind Baxter International Inc. (BAX) and CSL Ltd. (CSL.AU).
In a statement, Grifols said it will pay $19 cash and 0.641 newly issued, nonvoting shares for each share of Talecris, which is 49% owned by private equity firm Cerberus Capital Management LP. The offer is worth a total of $26 a share, a 53% premium to Talecris' average share price over the last 30 days.
At 1338 GMT, Grifols shares were down EUR0.54, or 5.9%, at EUR8.73, while the overall market was down 0.8%.
"The offer implies a hefty premium, will boost the company's debt load and force it to issue new shares," said Dirk Schnitker of CM Capital Markets Bolsa.
Grifols had total debt of EUR561.6 million at the end of 2009, 2.1 times earnings before interest, tax, depreciation and amortization of EUR266.1 million. The company said the Talecris purchase will push its debt-to-Ebitda ratio up to 5.
Nonetheless, the company says that despite a $100 million one-off charge, it will generate synergies of $230 million over the next four years, which will be derived from efficiency improvements at plasma-collection centers and in its manufacturing, marketing and research and development processes.
It also said the deal will boost earnings per share by 30% from the second year after completion.
The purchase will help Grifols boost its presence in the U.S. market, where it already derives 30% of its sales. It will allow the company to double its plasma collection and fragmentation capacity.
"We like the deal from a strategic point of view... there are obvious synergies," Banesto Bolsa analyst Luis de Blas said.
Grifols said its annual proforma revenue will rise to $2.8 billion--around EUR2.34 billion at current exchange rates--after the purchase. Around 58% of its revenue will come from North America. It had revenue of EUR913.2 million in 2009, 76% of which came from plasma products used to treat immunological and infectious diseases as well as coagulation problems.
Grifols recently said it will start research on products to treat Alzheimer's disease.
Cerberus tried to sell Talecris previously. In 2008, Australia's CSL announced a deal to buy Talecris for $3.1 billion in cash. The two companies canceled the merger a year ago after the U.S. Federal Trade Commission resolved to block it on antitrust grounds.
In a conference call with analysts, Grifols Chairman Victor Grifols said he doesn't expect his company's deal to purchase Talecris will run into the same problems because of Grifol's smaller size. It is currently the world's fifth-largest manufacturer of plasma products.
"We don't shake up anything in the United States...with this deal the top three players remain the same," Grifols said, adding his company expects to get regulatory approval by the end of this year and close the purchase in early 2011.
Analysts at Credit Suisse disagreed, however, saying in a note the latest merger plan could well be blocked, too, because "we still believe the FTC is likely to be skeptical of this deal and view the proposed deal as something that may increase industry pricing power and reduces competition."
-By Ana Garcia, EFE Dow Jones; +34 91 395 8120; [email protected] (Jon Kamp contributed to this article.)