Two international life science giants which have a large presence in the Triangle are making a major deal: Grifols (Nasdaq: GRFS) is acquiring a blood transfusion diagnostics unit from Novartis (NYSE: GFS) for $1.68 billion, the companies announced Monday.
It’s the biggest deal for Grifols, which is based in Spain, since it acquired RTP-based Talecris Biotherapeutics for $4 billion in 2010.
The company operates a huge plasma production plant in Clayton in nearby Johnston County and maintains a corporate presence in RTP. it also operates a number of blood donation centers in North Carolina.
Victor Grifols, CEO of Grifols, said the acquisition is part of a strategy to expand the company’s capabilities.
“The acquisition of Novartis’ diagnostic business is a step further into our vision to become a world leader also in the diagnostics field,” he explained. “To achieve this we knew we needed a significant presence in United States.
“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 immunohematolgyactivities.”
Novartis California Business Unit in Deal
Novartis, meanwhile, operates a big vaccine production plant in Holly Springs and plans to open a research and development center in RTP.
According to Novartis, the deal will involve a business unit based in California.
The divestiture is the biggest for Switzerland-based Novartis since 2007. The company has been looking to sell off parts of its operation. Recent rumors had focused on its animal health division.
Novartis expects to complete the transaction in the first half of next year, the company said in a statement. That’s its largest asset sale since Nestle SA bought its Gerber baby food brand in 2007.
Novartis has said it wants its businesses to be among the industry leaders or will otherwise consider divesting them. The blood-transfusion operation is currently part of the vaccines and diagnostics unit of the Basel-based drugmaker, which employs more than 125,000 people.
“This is a good deal for Novartis,” Chief Executive Officer Joe Jimenez said in a phone interview today with Bloomberg news. “It allows us to focus on our strategic businesses. It also provides good value for us on what is a good business but not a business we had decided to grow aggressively.”
Novartis rose 0.4 percent in Zurich trading today. The stock has returned about 29 this year, beating the 19-member Bloomberg European Pharmaceuticals Index, which gained 26 percent, including reinvested dividends.
Grifols shares rose as much as 3.2 percent in Madrid.
Detecting Infections
The Swiss drugmaker acquired the blood unit when it bought Chiron Corp. in 2006. The Emeryville, California-based business improves transfusion safety through testing for infectious disease and had sales of about $565 million in 2012.
Grifols, Europe’s largest maker of blood-plasma products, said it expects annual revenue from its diagnostics division to approach $1 billion after the purchase, which should boost earnings in the first year. The Barcelona-based company said it has a $1.5 billion bridge loan that’s fully subscribed in equal parts by Nomura, Banco Bilbao Vizcaya Argentaria SA and Morgan Stanley.
The purchase will increase Grifols’s leverage “moderately,” the Spanish company said. Nomura advised the blood-products maker on the purchase.
The transaction doesn’t include a related diagnostics unit that’s part of Novartis’s pharmaceutical business nor the Genoptix division, the Swiss drugmaker said.
