(Adds share price movement, analyst’s comment)
By Emma Pinedo
MADRID, Dec 15 (Reuters) - Spain’s Grifols, which said late on Wednesday it would buy U.S. medical device maker Hologic Inc’s side of their joint venture blood screening business for $1.85 billion, expects to refinance its debt once the deal is completed, its Chief Financing Officer said on Thursday.
The Spanish company aims to get its net debt gearing down to three times earnings before interest, tax, depreciation and amortisation within a couple of years compared with 4.3 times after completing the acquisition, which is being financed by a $1.7 billion term loan.
At the end of September the company’s reported net debt stood at $3.99 billion, 3.3 times its EBITDA.
“Assuming the market is okay ... we’re convinced that we could go to the market and refinance our debt in the first quarter,” Chief Financing Officer Alfredo Arroyo told Reuters.
Grifols’ diagnostics division accounted for 11 percent of the company’s core profit, though this will rise to 21 percent after the acquisition, Arroyo said.
On Wednesday Grifols said it would pay $1.85 billion in cash for a plant in San Diego, California as well as development rights, licences to patents and access to product manufacturers which served its joint venture with Hologic. It also said it expected the deal to close in the first quarter of 2017.
Shares in Grifols were up 6.2 percent at 18.18 euros by 0934 GMT on Thursday, leading gains on the Spanish Ibex index , up 0.15 percent.
“This acquisition will generate no sales, as those are already booked by Grifols, but will significantly increase the profitability of (its) diagnostic division which will now have margins of 40 percent (versus 15-20 percent before, on our estimates),” Broker Haitong said in a note that rated the move as “neutral to negative”.
Under the joint venture Hologic was mainly responsible for R&D and manufacturing the Procleix blood screening products, while Grifols, which develops plasma protein therapies, led the commercialisation. (Writing by Paul Day; Editing by Greg Mahlich)