Spanish company Grifols has announced a definitive agreement to acquire Novartis's blood transfusion diagnostics unit for $1.675bn.
The transaction will give critical mass and a significant US presence to Grifols's previously small diagnostics business, which in future is expected to account for more than 20% of the company's sales, compared with the current 4%.
The deal will be structured through Grifols's diagnostic division and a newly created 100% Grifols-owned subsidiary. It will also see an increase in Grifols' workforce by approximately 550 employees as former Novartis employees are likely to be retained.
Grifols's diagnostic division manufactures and develops instrumentation and reagents in three fields including transfusion medicine, immunology and haemostasis, in addition to production and distribution of blood collection bags.
Grifols will expand its portfolio with the addition of Novartis's diagnostic products for transfusion medicine and immunology, including its NAT technology (Nucleic Acid Amplification Techniques), instrumentation and equipment for blood screening, specific software and reagents.
The assets acquired include patents, brands, licenses and royalties, as well as the production plant in Emeryville, California, and commercial offices in the US, Switzerland and Hong Kong (for the Asia Pacific region) among others.
It also diversifies Grifols's business by promoting an activity area that complements the bioscience division, responsible for plasma proteins.
This agreement will give Novartis a solid return for the blood transfusion diagnostics unit acquired in 2006 as part of Chiron and posted net sales of around $565m in 2012.
Novartis's diagnostic business is expected to complement and extend Grifols's existing product range.
Grifols will now become a vertically integrated company that is able to provide solutions for blood and plasma donor centres, with the most complete product portfolio in the immunohaematology field such as gel cards, multicard and the new genotyping technology from Progenika.
In addition, Grifols will benefit from the creation of a more efficient platform to market a wider range of diagnostic products and services in the US and other countries, and will also optimise its after-sales resources.
Grifols president and CEO Victor Grifols said the acquisition of Novartis's diagnostic business was a step further in the company's global strategy for.
"To achieve this we knew we needed a significant presence in United States." Grifols said. "We initiated the process in the Bioscience area in 2003 with the acquisition of the ATC assets and continued with the Talecris transaction in 2011.
"During the last two years, the diagnostic division has been preparing for this step, especially in the immunohematolgy activities."
Osborne Clarke SLP. and Proskauer Rose LLP were Grifols's legal advisors, while Nomura acted as financial advisor.
Nomura, BBVA and Morgan Stanley will provide a fully subscribed bridge loan of $1.5bn in equal parts and the loan agreement does not include any financial restrictions with respect to Grifols's dividends policy or investments.
The transaction is subject to regulatory approvals and is expected to be completed in the first half of 2014.
Image: Novartis Basel Headquarters. Photo: courtesy of Novartis AG.