Spain may be embroiled in a credit crisis, but that hasn't stopped some of its companies from striking big deals. Take Grifols SA: This developer of medical products has agreed to shell out $3.4 billion to acquire Talecris Biotherapeutics Holdings (TLCR).
With a market cap of $2.36 billion, Grifols had to put together a significant financing package. This was no easy feat -- but does show that quality deals can get done.
The transaction is a big win for Talecris' private-equity sponsor, Cerberus Capital Management, which owns 49% of the company. Overall, Cerberus expects to net a more than $2 billion profit from its purchase of Talecris, a sharp contrast with the firm's recent disastrous deals, such as for Chrysler and GMAC.
A Look at Talecris
Talecris is one of the largest producers of plasma-derived protein therapies in the world, treatments for problems such as chronic inflammatory demyelinating polyneuropathy, primary immune deficiencies, alpha-1 antitrypsin deficiency, bleeding disorders and so on. Roughly 77% of the company's revenues come from two flagship drugs, Prolastin and Gamunex. Talecris has nearly 280 scientists and support staff as well as a solid infrastructure platform.
Interestingly enough, Talecris is really an amalgam of different deals struck by Cerberus. The key transaction was a $590 million transaction from Bayer AG, in which it acquired that company's plasma business in 2005 and renamed it Talecris.
A couple of years ago, Cerberus tried to sell Talecris to Australian biotech company CSL for $3.1 billion. However, the antitrust scrutiny was too intense and the deal fell apart.
So late last year, Cerberus took Talecris public, selling a majority stake in the business and raising a hefty $950 million.
Since then, Talecris has continued to expand. Last year, the company saw a 12% increase in sales to $1.53 billion and a net profit of $153.9 million.
Antitrust Issues Unlike to Impede Deal
In light of the antitrust issues with the CSL deal, there will definitely be scrutiny of the Grifols acquisition. The $7 billion plasma market is highly consolidated.
However, the market footprint of the combined firms in this case would not be as significant. Grifols, unlike CSL, has a fairly small presence in the U.S. market, which makes it more likely that the deal will pass muster with regulators in Washington and close in the fourth quarter.
Small Cap Investing
Learn now to invest in small companies the right way.View Course »