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Grifols Buys Novartis' Transfusion Dx Business for $1.68B

NEW YORK (GenomeWeb News) – Barcelona, Spain-based healthcare products firm Grifols today announced an agreement to purchase Novartis' transfusion diagnostics business for approximately $1.68 billion.

Grifolos is buying Novartis' diagnostic products for transfusion medicine and immunology, including its nucleic acid amplification techniques, instrumentation, and equipment for blood screening, specific software, and reagents. Assets being acquired include patents, brands, licenses, and royalties. Grifols also is acquiring a production plant in Emeryville, Calif., and commercial offices in the US, Switzerland, and Hong Kong.

Novartis' employees associated with the transfusion diagnostics business, about 550, are being retained by Grifols as part of the deal, which was unanimously approved by the boards of both firms and is anticipated to close in the first half of 2014.

The deal is fully underwritten with a $1.5 billion bridge loan fully subscribed in equal parts by Nomura, BBVA, and Morgan Stanley, Grifols and Novartis said.

The transaction will be structured through Grifols' Diagnostic Division and a newly created subsidiary owned by the company. Upon its completion, revenues from the division are expected to approach $1.0 billion on a pro form basis, or about 20 percent of the firm's total revenues, up from the current 4 percent, Grifols said.

The acquisition is part of a growth strategy by Grifols to complement its plasma protein therapies with diagnostic products and services.

Grifols provides protein therapies and other healthcare tools and operates three divisions — Diagnostic, Bioscience, and Hospital. The Diagnostic division develops and manufactures instruments and reagents directed at transfusion medicine, immunology, and hemostasis, and is a supplier of diagnostic tests for transfusion, including blood-typing tests, or donor-patient pre-transfusion compatibility tests. It also produces and distributes blood collection bags.

Its products are used by hospital blood banks, transfusion centers, and clinical immunohematology laboratories. In the US, more than 80 percent of the blood supply is tested on Novartis' systems, Grifols said.

Grifols said the deal will strengthen its Diagnostic business, in particular in the US, and diversifies its business "by promoting an activity area that complements the Bioscience division," which is focused on plasma proteins.

"The acquisition of Novartis' diagnostic business is a step further into our vision to become a world leader also in the diagnostics field," Grifols President and CEO Victor Grifols said in a statement. "To achieve this we knew we needed a significant presence in [the] United States."

As a result of the purchase, Grifols will have a "more efficient platform" to market a wider range of diagnostic products and services in the US and elsewhere "and will also optimize its after-sales resources."

Today's deal follows Grifols' purchase in March of a 60 percent stake of Progenika Biopharma, which develops molecular diagnostics and DNA chips for disease diagnosis and prognosis with a particular focus on tests for evaluating transfusional compatibility studies.