Analysts query CSL’s play for Vifor Pharma

Why CSL wants to acquire Swiss medical company Vifor Pharma is not ‘immediately apparent’, ­according to equities analysts at investment bank Macquarie.

CSL chief executive Paul Perreault. Analysts have weighed in on the prospect of CSL acquiring Swiss-based Vifor Pharma. Picture: Stuart McEvoy

Why CSL wants to acquire Swiss medical company Vifor Pharma is not “immediately apparent”, ­according to equities analysts at investment bank Macquarie.

But the acquisition could mean an increase in earnings per share of about 5 per cent before any synergies are included, according to the analysis written by David Bailey and Rachel Harwood.

The Australian’s DataRoom column revealed on Thursday afternoon that CSL was in exclusive talks to buy Vifor Pharma in a deal that could be worth $10bn.

Mr Bailey and Ms Harwood, in a note to clients, said Vifor’s therapeutic focus – on iron deficiency and nephrology – had “limited obvious product alignment” with the products in CSL’s portfolio.

“While we see this transaction as potentially financially accretive for CSL, we are looking for greater detail in relation to the strategic rationale for a potential acquisition,” they wrote.

Separately, CSL is expected to undertake an equity raising of ­between $4bn and $5bn and has engaged Bank of America.

Despite lengthy discussions, a deal is not expected immediately.

Key products for Vifor, which had revenues of $2.66bn for the ­financial year to the end of June, include Mircera, Maltofer and Ferinject.

CSL failed to complete its last major acquisition, its bid for rival Talecris Biotherapeutics, after pressure from regulators scuppered the $US3.1bn deal. On Friday, CSL declined to comment.

“There is no certainty that any transaction will result from CSL’s consideration of such opportunities and, if any transaction does result, when such a transaction would occur,” the company said in an ASX statement.

The view of Macquarie’s equity analysts is shared by those at Morgan Stanley. In an earlier note to investors, the bank’s healthcare analyst, Sean Laaman, said it was not “immediately clear” where revenue and cost synergies would come from.

However, Mr Laaman suggested CSL could use its collection centres to administer Ferinject and Mircera.

Taking a look at the potential deal, Jefferies analyst David Stanton put into context Vifor’s presence in the healthcare market. “Vifor offers a diversified portfolio of prescription medicines as well as over-the-counter products. (It) has a global presence and a broad network of affiliates and partners around the world,” he said.

“In addition, Vifor has a presence in the renal (kidney) dialysis market … primarily built around the joint company Vifor Fresenius Medical Care Renal Pharma.

“Fresenius Medical Care has access to more than 345,000 ­patients in its global network of around 4000 dialysis clinics and is the world’s leading provider of products and services for people with chronic kidney failure.”

The acquisition would be “a departure in terms of therapeutic area for CSL but does tie into their nascent kidney transplant franchise”, Mr Stanton told clients.

The Australian’s DataRoom column in March flagged that an acquisition of Vifor by CSL could be on the cards amid a healthy M&A environment. This was months after Vifor was reportedly fielding an approach said to value the business at about $14bn. That approach was rebuffed because of price differences.

For the year to June, CSL reported a $2.4bn net profit, up 10 per cent on a constant currency basis from the previous corresponding period, while revenue also gained 10 per cent.

For the 2022 financial year, CSL is expecting net profit in the range of $2.2bn-$2.25bn on a constant currency basis.

CSL shares fell on the news of the potential acquisition, with the stock down 6 per cent on its recent highs and trading below $300 for the first time since October.

The shares closed on Friday at $297.67.