Mergers and Acquisitions

* On November 11, 2013, Novartis has announced a definitive agreement to divest its blood transfusion diagnostics unit to Grifols for $ 1.675 billion (€1.24 billion). The transaction is part of Grifols' growth strategy of complementing its range of plasma protein therapies with other diagnostic products and services. Grifols will expand its portfolio by including Novartis' diagnostic products for transfusion medicine and immunology, including its highly innovative, market-leading NAT technology (Nucleic Acid Amplification Techniques), instrumentation and equipment for blood screening, specific software and reagents. 
Acquired in 2006 as part of Chiron, the blood transfusion diagnostics unit has formed part of Novartis Vaccines and Diagnostics. The blood transfusion diagnostics unit is dedicated to increasing transfusion safety worldwide with nucleic acid testing, blood testing products and immunoassay reagents that detect infectious disease. Headquartered in Emeryville, California, its net sales in 2012 were approximately USD 565 million. Not included in the sale is the Novartis companion diagnostics unit that is integrated into the pharmaceuticals business, nor the Genoptix business, as these are closely linked to the pharmaceuticals pipeline.

The transaction will be structured through Grifols' Diagnostic Division and a newly created 100% Grifols-owned subsidiary.Grifols estimates pro-forma total annual revenues to approach US$1.0 billion (€740 million) (including royalties) for its Diagnostic Division after the closing of the operation.

As a result, the Diagnostic Division of Grifols would represent more than 20% of the group's total income, compared to the current 4%, and the company would accelerate its implementation of a new growth strategy based on promoting complementary activity areas. As former Novartis employees are to be retained, the transaction will also increase Grifols' workforce by approximately 550 employees.

The transaction´s financing is fully underwritten. A bridge loan for US$1.5 billion, has been fully subscribed in equal parts by Nomura, BBVA and Morgan Stanley. The loan agreement does not include any financial restrictions with respect to Grifols' dividends policy or investments. The acquisition has been unanimously approved by the board of directors of both companies.

This transaction, requiring customary regulatory approvals, is expected to be completed in the first half of 2014.

The assets acquired include patents, brands, licenses and royalties, together with the production plant at Emeryville (California, United States) and commercial offices in United States, Switzerland and Hong Kong (for the Asia-Pacific region) among others. Grifols' Diagnostic Division manufactures and develops instrumentation and reagents in three fields: transfusion medicine, immunology and hemostasis. Grifols also produces and distributes blood collection bags. The company is one of the leading suppliers of diagnostic tests for transfusion such as blood typing tests or donor-patient pre-transfusion compatibility tests. Its products are used by hospital blood banks, transfusion centers and clinical immunohematology laboratories.
This strategic operation diversifies Grifols' business by promoting an activity area that complements the Bioscience Division (plasma proteins).  Novartis' diagnostic business, which focuses on guaranteeing the safety of blood donations for transfusion or to be used in the plasma fractionating industry, complements and extends Grifols' existing product range. Grifols will become a vertically integrated company able to provide solutions for blood and plasma donor centers, with the most complete product portfolio in the immunohematology field: gel cards, multicard and the new genotyping technology from Progenika.