CSL, the nation’s largest biotechnology company, is expected to finalise a $US12bn ($16.74bn) deal to acquire Swiss firm Vifor Pharma as early as Tuesday.
Local investment bankers involved in negotiations flew from Sydney to Melbourne on Monday ahead of an announcement, sources with knowledge of discussions said.
The Australian’s DataRoom column revealed the CSL was in talks to buy Vifor, which specialises in iron deficiency treatments, on December 2.
The company declined to comment at the time, but on Monday confirmed it was “in discussions with Vifor Pharma Ltd regarding a potential transaction”.
“At this time there remains no certainty that any transaction will result and … when such a transaction would occur,” the company told the ASX.
Sources with knowledge of discussions said CSL was also expected to raise about $US4bn as part of the Vifor Pharma transaction.
A deal would follow a frenetic week for corporate activity in the healthcare sector, with Ramsay Health Care announcing the $1.4bn acquisition of Elysium Healthcare from private equity firm BC Partners as suitors capitalise on buoyant market conditions.
Ramsay is funding its transaction with debt and will not raise equity to pay for the acquisition.
CSL’s proposed acquisition of Vifor would be its largest ever over almost three decades on the ASX.
CSL shares began trading at 77.7c in 1994, but had increased to $32 by 2011.
They closed down 0.3 per cent on Monday at $297.27.
The publicly listed and Zurich-based Vifor specialises in iron deficiency, nephrology, cardiology and rare diseases. Vifor owns a portfolio of both prescription and non-prescription medicines.
It has been some time since CSL embarked on any major corporate activity, but a major deal in Europe could bring a hint of nostalgia for the company’s chairman, Brian McNamee. Dr McNamee ran CSL from 1990 to 2013 and on his watch the company purchased ZLB from the Swiss Red Cross for nearly $1bn, transforming what was already a successful business into a healthcare powerhouse.
Despite the success of that deal, some equities analysts are sceptical about the proposal to purchase Vifor. In an earlier note to clients, Credit Suisse analyst Gretel Janu said the acquisition “would be a significant shift from its core competency … as well as its core therapeutic areas – immunology, haematology and neurology”.
Similarly, Macquarie analysts David Bailey and Rachael Harwood told clients in a note earlier this month that there was “limited obvious product alignment”.
“As such, the potential strategic rationale for the transaction is not immediately apparent,” the analysts wrote.
“We are looking for greater detail in relation to the strategic rationale for a potential acquisition,” the note reads.
CSL is a biotechnology company that develops products to treat and prevent serious medical conditions.
The company uses human plasma to produce treatments for bleeding disorders including haemophilia and von Willebrand disease, primary immune deficiencies, hereditary angioendema, inherited respiratory disease and neurologicaldisorders.
But CSL’s reliance on blood plasma has also concerned some in the market, with the Covid-19 pandemic putting pressure on collections and lowering margins.
CSL is partnering with AstraZeneca in producing a Covid-19 vaccine at its factory at Melbourne’s Broadmeadows.
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.
The company’s revenues also rose 10 per cent in that time.
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