Australia's CSL to buy Swiss drugmaker Vifor for $11.7 bln

3 minute read

The headquarters of Swiss drugmaker Vifor Pharma in Glattbrugg, Switzerland November 16, 2020. REUTERS/Arnd Wiegmann/File Photo

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  • CSL buying Vifor in an all-cash deal
  • CSL raising about $5 bln in equity to fund the deal
  • Vifor shares up more than a third since early Dec

ZURICH, Dec 14 (Reuters) - Australian biopharmaceutical giant CSL Ltd (CSL.AX) said it would buy Swiss drugmaker Vifor Pharma AG (VIFN.S) for $11.7 billion, as it aims to diversify beyond its blood plasma collection business that took a hit from COVID-19 curbs.

CSL, one of Australia's largest companies by market value, offered Vifor $179.25 a share in an all-cash deal, it said.

The deal, CSL's biggest to date, will give it access to Vifor's treatments for iron deficiency, kidney and cardio-renal diseases, and production sites in Switzerland and Portugal.

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The offer was unanimously recommended by Vifor's board and its largest shareholder Patinex AG also agreed to tender its shares, CSL said.

Zuercher Kantonalbank analyst Laurent Flamme said in a note there was little potential for cost savings due to Vifor's numerous partnerships, moderate R&D spending and almost no overlap with the CSL portfolio. A patent litigation with Viatris (VTRS.O) in the United States was also creating volatility.

"The price CSL is paying is way too high," he said, telling Vifor shareholders to "take the money and run".

CSL will help fund the deal with a placement worth about $5 billion to institutional and retail investors, $6 billion debt and existing cash and undrawn facilities of $2 billion.

The deal will allow CSL to diversify beyond blood plasma collection, which generates nearly 90% of the company's profit. It is expected to immediately add to earnings.

Shares in Vifor, formerly known as Galenica, have soared by more than a third since early December on news of a potential deal following months of lacklustre performance. read more

CSL's offer represents an implied premium of about 40% to Vifor's Dec. 1 close. Vifor shares were up 11.6% at 156.55 francs at 1331 GMT.

Vifor's blockbuster drug is iron deficiency treatment Ferinject/Injectafer, generating more than a third of net sales in the first half of 2021.

CSL Chief Executive Paul Perreault told reporters CSL was not concerned about patent litigation with Viatris's Mylan and Novartis (NOVN.S) unit Sandoz regarding Ferinject, saying Vifor was working hard to resolve the issue.

The capital raising is one of the largest secondary-market deals in Australia and, according to Refinitiv data, is among the 10 biggest secondary deals worldwide this year.

The starting point of the book build is A$273, an 8.2% discount from Monday's close of A$297.27, after which trading was halted. The bookbuild is taking orders in A$2 increments up to $A285 a share. The book closes at 0600 GMT on Wednesday.

CSL will sell 23.1 million shares in fully underwritten placement, alongside a non-underwritten 2.7 million share purchase plan underway.

PJT Partners, Bank of America, Goldman Sachs and Credit Suisse advised CSL, and Gresham Advisory Partners advised the CSL board of directors.

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Reporting by Nikhil Kurian Nainan and Shashwat Awasthi in Bengaluru, Silke Koltrowitz in Zurich and Scott Murdoch in Hong Kong; Editing by Edmund Blair, Louise Heavens and David Evans

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