Grifols and Tiancheng Pharma, the main shareholder of Germany’s Biotest, have agreed that Grifols will buy Biotest with the aim of increasing its plasma collection capacity. Tiancheng Pharma owns 89.9% of Biotest’s ordinary shares and 1.1% of the preferred shares. The consideration of €1.6 Bn for the 100% of Biotest will be paid in cash and represents a premium of 23%.
Grifols will use all the funds from the sale of Biomat to repay debt, approximately 14% of the €6.2 billion of net financial debt at the end of March, for a leverage level of 5.1 x EBITDA. Although it is not known what percentage of Biomat has been sold, some market sources put it at between 30% and 35%.
Grifols now operates 344 plasma centers worldwide: 289 in the U.S. and 55 in Europe across Germany, Austria and, recently Hungary. The 25 centers acquired from BPL are authorized by the U.S. Food and Drug Administration (FDA) and the UK’s Medicines and Healthcare Products Regulatory Agency (MHRA).
Grifols makes a significant investment to become the only large-scale commercial manufacturer of plasma products in Canada, with a fractionation capacity of 1.5 million liters/year.The operation aligns with Grifols’ commitment to helping countries reach self-sufficiency of life-sustaining plasma-derived medicine. The acquisition includes 11 collection centers in the United States
Grifols estimates an impact of 200M euros on annual accounts due to the pandemic. This will be reflected in the gross margin line in the firm’s H1’20 results statement. That said, it will not alter the income.This is due to the lower amount of donations that the group received during the confinement period.
After announcing that the United States considered it “basic infrastructure” in the coronavirus health emergency, Grifols has signed a multilateral collaboration agreement in that country with the U.S. Advanced Biomedical Research and Development Authority (BARDA), the U.S. Food and Drug Administration (FDA) and other federal public health agencies. The objective will be to collect plasma from patients who have recovered from Covid-19, process it and produce hyperimmune immunoglobulins.
US President Donald Trump has reportedly declared Grifols’ donation centers and fractionation plants to be essential infrastructures. So their activity would be guaranteed in the face of a possible economic slowdown. The US is the country where Grifols has most of its fractionation plants and plasma donation centers (more than 92% of the 300 centers it operates).
José Benito de Vega | Grifols has had a very positive stock market performance in 2019, with a 35% revaluation compared to 9% of the IBEX35. The positive evolution of its results, its powerful cash flow generation and debt reduction, together with its potential growth thanks to a treatment for Alzheimer’s that is under study, explain the good behavior of the stock.
BofAML | We reiterate Buy on Grifols A&B for durable double-digit EPS growth driven by strong global plasma market position. Margin expansion is returning as plasma cost stabilises. AMBAR study in Alzheimer’s disease; may increase IG/Albumin demand through off-label use.
As a result of conversations maintained with Shanghai RAAS, Grifols has reached an agreement to buy assets through a share issue. The Spanish company will buy 26.2% of economic and voting rights in the Chinese firm (valued at €3.8 Bn). So, Shanghai RAAS’ capital will become: 26.7% Create Group, 26.2% Grifols and 25.8% RAAS China Limited.