September 17, 2021
Grifols announces its investment in Biotest
- Grifols agrees to acquire the existing share capital of Tiancheng (Germany) Pharmaceutical Holdings for EUR 1,100 million. Tiancheng (Germany) Pharmaceutical Holdings is the owner of 90% of Biotest ordinary shares and 1% of Biotest preferred shares
- The transaction values Biotest’s Equity at EUR 1.6 billion. Grifols launches a voluntary tender offer for the shares of Biotest
- Biotest is a German public listed healthcare company specialized in innovative hematology and clinical immunology with an attractive pipeline with novel proteins that complement Grifols’ product portfolio
- By joining forces, Biotest and Grifols will increase plasma therapies availability, ensuring greater patient access to plasma medicines across the world
- This acquisition will notably strengthen Grifols’ industry positioning by accelerating and expanding its pipeline and commercial footprint and allowing the company to improve its plasma economics and margins
- Innovative therapies, revenue and cost synergies are projected to create additional significant value, driving revenue growth and margin expansion: over EUR 7 billion in combined revenues, more than EUR 2 billion in EBITDA, 30%+ EBITDA margin and a leverage ratio below 3.5x by 2024
- The transaction is subject to regulatory approvals and conditions and is expected to close by the end of the first semester of 2022
Barcelona (Spain), September 17, 2021.- Grifols (MCE:GRF, MCE:GRF.P, NASDAQ:GRFS), a global healthcare leader with a track record of more than 110 years dedicated to enhancing people’s health and well-being and a forerunner in plasma-derived medicines, transfusion diagnostics and hospital pharmacy solutions, today announced its agreement with Tiancheng International Investment Ltd. (private company registered in Hong Kong) to acquire 100% of the shares of Tiancheng (Germany) Pharmaceutical Holdings AG, German company owner of 89.88% of Biotest ordinary shares and 1.08% of Biotest preferred shares for EUR 773 million and a loan in the amount of EUR 313 million.
The operation assessed Biotest’s equity and enterprise value at approximately EUR 1.6 billion and EUR 2 billion, respectively.
Upon completion of the transaction, Grifols will indirectly own 17,783,776 ordinary shares in Biotest, representing about 89.88% of Biotest’s voting rights and 44.94% of total share capital, and 214,581 preferred shares in Biotest, representing about 0.54% of the total share capital.
The ordinary shares in Biotest indirectly held by Tiancheng International Investment Ltd. have been valued at EUR 43.00 per ordinary share and the preferred shares at EUR 37.00 per preferred share.
Parallel to the transaction, Grifols launches a voluntary public tender offer to all outstanding ordinary and preferred shareholders to acquire in cash Biotest’s remaining ordinary and preferred shares for EUR 43.00 and EUR 37.00, respectively.
This transaction reflects how Biotest and Grifols live out its missions and jointly advance towards increasing global plasma-derived therapies availability while meeting patients’ needs around the world.
This acquisition will significantly reinforce Grifols’ industry capabilities by enhancing its plasma-derived medicines access, pipeline and sales presence. Furthermore, it will provide access to new scientific and industrial capabilities. It will also improve Grifols’ plasma economics and revenue per liter bringing innovative plasma proteins to drive revenue growth and margin expansion.
In parallel, Grifols will also expand and diversify its plasma sourcing through the addition of 26 European plasma centers and strengthen its operations and revenues in EMEA (Europe, the Middle East and Africa) region.
As Raimon Grífols Roura, co-CEO, observes, “This unique opportunity will allow Grifols and Biotest to mark a new milestone while shaping the plasma industry. It will enlarge our existing portfolio of plasma-derived therapies and fast-track the development of new products, with a concerted focus on delivering value to patients, shareholders and other key stakeholders. We look forward to partnering with the Biotest team.”
Víctor Grífols Deu, co-CEO, agreed, adding, “This operation offers a singular opportunity to promote our European innovation hub and collaborate with an outstanding German firm renowned for its expertise in clinical development. By joining forces, we aim to advance innovative scientific and plasma-derived developments that ultimately offer patients an enhanced quality of life.”
The transaction is subject to regulatory approvals and other conditions. It is expected to close by the end of the first semester of 2022.
Grifols retained Osborne Clarke Spain, Germany and UK and Proskauer Rose, L.L.P as legal advisors and Nomura Securities International, Inc. and UBS Europe SE as financial advisors.
A complementary investment to boost performance
- Grifols and Biotest share similar values and corporate cultures stemming from family origins
- Improved plasma economics and revenue per liter by leveraging currently unused proteins and Grifols’ global network of plasma centers
- Notable increase in revenues and profit margins starting in 2023 through new product launches
- Significant revenues and cost synergies to develop, produce and distribute plasma-derived therapies
- Accelerated product-development pipeline
- Greater geographic balance of plasma sourcing and revenues
- Leading industrial capacity of more than 20 million liters of plasma by 2021
- By 2024, Grifols expects combined revenues of over EUR 7 billion, more than EUR 2 billion in EBITDA, EBITDA margin higher than 30%, and leverage ratio below 3.5x
Founded in 1946, Biotest AG is a global company listed on the Frankfurt Stock Exchange that specializes in innovative hematology and clinical immunology solutions. Headquartered in Dreieich (Germany), it develops, produces and markets biological medicinal products with applications in hematology, clinical immunology and intensive care. The company’s current portfolio includes 12 different products with a global commercial footprint in more than 90 countries. Biotest employs 1,928 people around the world.
As part of a broader pipeline, Biotest is leading clinical trials on plasma-derived fibrinogen (BT-524) to treat congenital and acquired disorders. These include the Adjusted Fibrinogen Replacement Strategy (AdFirst) study in patients with high blood loss during spine surgery and abdominal surgery for treatment of pseudomyxoma peritonei (PMP).
Biotest is also conducting a clinical trial on plasma-derived IgM concentrated (Trimodulin, BT-588) for the treatment of patients with severe community-acquired pneumonia (sCAP).
In addition to fibrinogen and IgM, the company’s pipeline also includes several plasma-derived assets.
Biotest has a manufacturing capacity of up to 1.5 million liters of plasma annually, which it expects to double through the Biotest Next Level Project. Its plasma center network includes 26 European centers located in Germany, Czech Republic and Hungary.
In 2020, Biotest reported EUR 484 million in revenues and an Adjusted EBITDA of EUR 108 million.
Financial highlights of the transaction
The investment in cash represents a 23% premium to Biotest’s ordinary shares 30-day VWAP (volume weighted average price) and an aggregate consideration of approximately EUR 2 billion, including the assumption of Biotest’s net debt.
To fund the transaction, Grifols has received a bridge financing commitment for EUR 2 billion unsecured bridge financing commitment provided by BofA Securities.
Grifols plans to explore its financing options for unsecured debt.
Grifols is highly confident about achieving this deleveraging profile using all its available tools, as necessary. Grifols does not expect to pursue any meaningful M&A or cash dividends until leverage is below 4x.