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Novartis To Sell Blood Transfusion Diagnostics Unit To Grifols For $1.68 Bln

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Swiss pharma giant Novartis AG (NVS) Monday announced a definitive agreement to divest its blood transfusion diagnostics unit to Barcelona, Spain-based Grifols SA (GRFS) for $1.675 billion. The transaction is expected to be completed in the first half of 2014.

Joseph Jimenez, CEO of Novartis, said, "The sale of the Novartis blood transfusion diagnostics unit enables us to focus more sharply on our strategic businesses while providing Grifols with a platform for global expansion."

The blood transfusion diagnostics unit is dedicated to increasing transfusion safety globally with nucleic acid testing, blood testing products and immunoassay reagents that detect infectious disease.

The business was acquired in 2006 as part of Chiron Corp. and has formed part of the Swiss firm's Vaccines and Diagnostics.

Headquartered in Emeryville, California, its net sales were $565 million in 2012. The figure does not include the Novartis companion diagnostics unit that is integrated into the pharmaceuticals business, and the Genoptix business, as these are closely linked to the pharmaceuticals pipeline.

Grifols is the world's third largest producer of plasma-derived therapies. The company said separately that the deal is part of its growth strategy of complementing its range of plasma protein therapies with other diagnostic products and services.

The Spanish firm will expand its portfolio by including Novartis' diagnostic products for transfusion
medicine and immunology, including market-leading NAT technology, instrumentation and equipment for blood screening, specific software and reagents.

The assets acquired include patents, brands, licenses and royalties, along with the production plant at Emeryville and commercial offices in the U.S., Switzerland and Hong Kong, among others.

This acquisition is estimated to significantly increase the company's sales and EBITDA with earnings accretion in the first year.

The transaction is expected to strengthen Grifols' Diagnostic Division, particularly in the U.S., with strong and specialized commercial organization. It also diversifies Grifols' business by promoting an activity area that complements the Bioscience Division.

Grifols said Novartis' diagnostic business complements and extends Grifols' existing product range. Grifols will become a vertically integrated company that can provide solutions for blood and plasma donor centers, with the complete product portfolio in the immunohematology field such as gel cards, multicard and the new genotyping technology from Progenika.

Grifols estimates pro-forma total annual revenues to approach $1.0 billion for its Diagnostic Division once the deal is closed. As a result, the division will represent over 20percent of the group's total income, compared to the current 4 percent. The transaction will also increase Grifols' workforce by 550 employees.

To facilitate the deal, a bridge loan for $1.5 billion has been fully subscribed. The acquisition has been unanimously approved by the board of directors of both companies.

Novartis closed up 0.4 percent on Friday at 70.95 Swiss francs.

Grifols settled down 0.3 percent at 30.96 euros in Madrid.

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