Australian biopharmaceutical giant CSL Ltd confirmed on Monday it is in talks to buy Swiss drugmaker Vifor Pharma Ltd in a deal reported by media to be worth about A$10 billion ($7.2 billion), as it looks to diversify beyond blood plasma products.
The talks, which were first reported earlier this month, come as Australia’s fourth-largest company faces pressure to generate growth outside its main businesses of collecting blood plasma to make treatments for rare diseases and vaccine production.
CSL has pointed to a soft market for blood collections due to COVID-19 movement restrictions and concerns about the coronavirus, although it has said collection rates are improving for the business unit which generates nearly nine-tenths of its profit.
Prospects for CSL’s vaccine business, meanwhile, dimmed after it suspended its own COVID-19 vaccine development and Australia opted for Pfizer/BioNTech’s product as its major inoculation tool over AstraZeneca Plc’s shot, which CSL manufactures.
CSL, which declined to comment on media reports earlier this month about a possible buyout of Vifor, issued a brief statement saying the company “confirms that it is in discussions with Vifor Pharma Ltd regarding a potential transaction”.
The statement gave no further detail and added that there was no certainty any deal would eventuate.
A successful deal would be CSL’s biggest acquisition and give it access to Vifor’s treatments for iron deficiency, kidney and cardio-renal diseases, as well as its production sites in Switzerland and Portugal, analysts said.
However, they expressed concern that the benefits to CSL may be limited since there were no obvious major cost-savings from joining the companies. Plus, they added, Vifor had a record of volatile earnings.
“Should CSL be able to pick it up cheaply, potentially using equity, we can see the merits,” said Damien Klassen, head of investments at Nucleus Wealth, which holds CSL shares.
“However, given Vifor’s issues, the price paid will be very important,” he added.
Shares of Vifor surged over 20% when news of the potential deal was first reported. Based on Friday’s closing price, the company had a market value of 7.68 billion Swiss francs ($8.34 billion).
CSL shares closed slightly lower on Monday, against a higher overall Australia market.
Source: Reuters.com