Grifols, a Spanish producer of plasma protein therapies, plans to pay $3.4 billion for Talecris Biotherapeutics in an effort to expand its blood-based medicines business to North America and leverage efficiencies of scale.

 

The combination would make Grifols the number three blood products maker globally with pro-forma annual revenues of about $2.8 billion, a spot now occupied by Talecris. That would bring it much closer to competing with the number two player, Australia's CSL, which had 2009 revenue of $2.9 billion. Baxter is the industry's top player.

 

CSL tried to buy Talecris in 2009, but was prevented from doing so when the U.S. Federal Trade Commission expressed concerns about anti-trust issues, a pitfall Grifols is trying to avoid by emphasizing the potential combination's replacement of Talecris among the industry's biggest players.

 

If completed, the deal would be the third largest in the pharmaceutical sector this year, according to Reuters.

 

Grifols' offer values Talecris at $26.16 per share, $19 of which would be paid in cash, with the remainder paid in non-voting shares.

 

The 53 percent premium over the Talecris' 30-day average share price offers a rich exit for Cerberus and Ampersand, the private equity firms that own about 49 percent of Talecris.

 

Grifols expects to save about $230 million over the next four years if the combination is successful, savings derived from plasma collection network efficiencies, as well as optimized manufacturing sales, marketing and R&D. It will also take a one-time charge of $100 million.

 

The combination could create a vertically integrated and diversified plasma protein therapies company with complementary geographic footprints and increased manufacturing scale, says Grifols.

 

New access to Grifols' manufacturing facilities could also allow Talecris, which has faced the specter of reaching its full production capacity by 2011, to ramp up its manufacturing productivity without making major new investments of its own.

 

The transaction is expected to close in the second half of 2010.