Biotech Values

[DewDiligence]

Grifols to Acquire TLCR for $3B in Cash+Stock—WSJ

[TLCR, which is half owned by Cerberus Capital Management, has been trying to sell itself for a long time. In Jun 2009, TLCR’s insiders thought they had a deal with CSL Behring, but the FTC nixed it (#msg-38506825). Instead, the company IPO’d in Sep 2009 and insiders unloaded $400M of their own stock in a concurrent secondary offering (#msg-42015380). Grifols, based on Spain, is one of the largest plasma-protein companies, but it’s not as large as CSL and it has a much smaller presence in the US market, which may allow the Grifols-TLCR marriage to go through.

Both Grifols and TLCR sell IVIG, which comprised a whopping 61% of TLCR’s sales in 3Q09 (#msg-43485367, #msg-50841315). If the FTC were to demand any concessions to get this deal done, it could be the divestiture of Grifols’ small IVIG business in the US.]

http://online.wsj.com/article/SB10001424052748704726104575291100383060696.html

›JUNE 6, 2010, 6:37 P.M. ET
By DANA CIMILLUCA And PETER LATTMAN

Grifols SA of Spain plans to buy Talecris Biotherapeutics Holdings Corp., a U.S. maker of plasma medicines part-owned by Cerberus Capital Management LP, for more than $3 billion, according to people familiar with the matter.

The two sides plan to announce the deal—which Grifols will pay for using a mix of mainly cash and some stock—as early as Monday morning, the people said. The exact price couldn't be learned.

The sale, should it not fall apart at the last minute, would represent a big win for Cerberus, which suffered through the financial crisis with its high-profile, ill-fated investments in auto maker Chrysler LLC and lender GMAC LLC. If a deal is completed, Cerberus and its co-investors would realize a gain of more than $2 billion on their original investment.

Talecris, based in Research Triangle Park, N.C., was formed in 2005 when Cerberus, along with Boston-based private-equity firm Ampersand Ventures, paid about $450 million for the blood-plasma unit of German drug company Bayer AG.

Talecris had $1.53 billion in sales last year, up 12% from a year earlier. Profit more than doubled to $153.9 million. The company's products help treat conditions such as immune deficiencies, bleeding disorders and infectious diseases.

Cerberus tried to sell Talecris previously. In 2008, CSL Ltd., an Australian biotechnology company, 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. After that scuttled deal, Talecris raised $950 million in an initial public offering of stock in September 2009. The private-equity firms retained a roughly 50% stake in the company. This deal is likely to garner less antitrust scrutiny, given that Grifols has little presence in the U.S., while Talecris doesn't have much abroad. Indeed, the logic of the deal in part is to create a larger global competitor with economies of scale, one of the people said.

The Spanish company was founded about 70 years ago, and is still run by the Grifols family, which retains a stake. The company has a market capitalization of €1.97 billion ($2.36 billion).

Apart from representing a bright spot in a private-equity industry beset by soured economies and reduced access to bank lending as a result of the financial crisis, the deal shows that even in southern Europe, market turmoil hasn't completely killed off merger activity. Even though it is barely bigger than Talecris as measured by market value, Grifols was able to cobble together the cash needed for the deal from a group of banks, one of the people said.‹