Grifols acquires Novartis diagnostic unit for €1.24 billion

Barcelona-based healthcare multinational Grifols has agreed to acquire the transfusion diagnostics unit of Swiss firm Novartis for $1.675 billion — around 1.240 billion euros — the company announced Monday. The firm hopes to be able to finalize the acquisition in the first quarter of 2014.

The market reacted favorably to the news with Grifols’ share price rising 4.54 percent to 32.36 euros to lead Ibex 35 index gains on Monday.

The acquisition will allow Grifols to significantly increase sales and EBITDA in the first year, said the firm, while admitting the transaction would also “moderately” increase its debt. But it added that this would be canceled out by a greater ability to generate cash flows.

The company will finance the operation via a $1.5-billion (1.122-billion-euro) bridging loan fully subscribed in equal parts by Nomura, BBVA and Morgan Stanley.

Grifols said the transaction was part of its strategy of complementing its range of plasma protein therapies with other diagnostic products and services. After the closing of the operation, it estimates pro-forma total annual revenues for its Diagnostic Division will approach $1.0 billion (740 million euros), including royalties, accounting for 20 percent of the company’s total earnings, compared with 4 percent currently. Grifols is one of the Spanish firms that has best ridden out the crisis thanks to its international reach and the specialization of its products.