CSL to buy Talecris Biotherapeutics for $3.1 billion

CSL to buy Talecris Biotherapeutics for $3.1 billion
By Daniel Inman, | 14 August 2008
Read this article online at:
http://www.financeasia.com/article.aspx?CIID=119523

Australian plasma giant CSL will tap several sources to pay for the purchase of the US company, including a $1.5 billion share placement.
CSL yesterday announced that it had signed an agreement to acquire Talecris Biotherapeutics Holdings for $3.1 billion. CSL is an Australian company that focuses on the development and manufacture of vaccines and plasma therapies. It will be purchasing the US manufacturer of plasma-derived protein therapies from two hedge funds – Cerberus Partners and Ampersand Ventures.

The purchase price values Talecris at an historical adjusted Ebit multiple of 12.7 times, based on the 12 months ending June 30, and an Ebitda of 12 times, before including synergies. The merger will result in synergies of approximately $225 million, which will be realised over the first three years. The company will however be subject to restructuring costs of around $125 million, which will be incurred 12 to 15 months after closing.

CSL shall fund the acquisition with money from three sources.

Yesterday lunchtime, Australia’s largest overnight share placement was launched, which is expected to bring in $1.5 billion of capital. The primary share offering has a price range of between A$34.50 ($30.03) and A$39.00, providing a discount of between 11.5% to 0% on the last sale price of A$39. As of early evening yesterday, the book was already covered.

A further $1.2 billion will come from debt, which will be raised after anti-trust regulators have approved the deal. If CSL is unable to complete the deal, it will be subject to a break fee of $75 million. In the meantime Merrill Lynch, which is advising CSL on the deal, is also providing its client with a bridging loan to cover the expense until the debt can be acquired. The remainder of the acquisition will be funded with cash.

After the merger, the company will have a pro forma gearing of 33% and a net debt-to-Ebitda of 1.5 times.

By merging with Talecris, CSL will benefit from the following synergies: a more efficient plasma collection network; optimised manufacturing; a maximised yield of plasma protein from each litre of plasma; and greater R&D capabilities. These synergies are expected to help CSL maintain its position in the $15 billion a year plasma therapy industry, which has grown at a CAGR of over 10% in the last decade.

Talecris’s main products include: Gamunex, an intravenous immunoglobulin used in treating immune deficiencies, acute infections, and inflammatory and autoimmune diseases; and Prolastin, the first treatment for Alpha1-PI deficiency. Talecris was advised by Morgan Stanley and Goldman Sachs.

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