Grifols to acquire Talecris Biotherapeutics

Grifols (GRF.MC) a global healthcare company and leading producer of plasma protein therapies, and Talecris (Nasdaq: TLCR) a U.S.-based biotherapeutics products company, today announced that they have signed a definitive agreement through which Grifols will acquire Talecris for a combination of cash and newly-issued Grifols non-voting shares having an aggregate value today of approximately $3.4 billion (euro 2.8 billion), creating a global leader of life-saving and life enhancing plasma protein therapeutics.

The combination of Grifols and Talecris will create a vertically integrated and diversified international plasma protein therapies company, bringing together complementary geographic footprints and products, as well as increased manufacturing scale. Grifols' leading global footprint will benefit from Talecris' strong presence in the United States and Canada. Grifols' available manufacturing capacity will enable Talecris to increase production in the near term.  As a result, the combined company will be better able to meet the needs of more patients with under-diagnosed disease states around the world.  

In addition, upon completion of the transaction, the combined company will have:

• the ability to derive more protein therapies from every liter of plasma,  enhancing access and availability for patients, and optimizing use of collected plasma;
• an established plasma collection operation capable of meeting the combined company's needs to address increasing patient demand and an accelerated path to improving the cost efficiency of the Talecris plasma platform;
• a broad range of key products addressing a variety of therapeutic areas such as neurology, immunology, pulmonology and hematology, among others;
• an enhanced R&D pipeline of complementary products and new recombinant projects that will drive sustainable growth;
• a well established clinical research program in the U.S.

Grifols Chairman and CEO Victor Grifols commented, "The acquisition of Talecris furthers our vision to better serve patients and health care professionals with innovative products, a strong clinical research capability and new research into recombinant therapies. We look forward to combining the strengths of both companies to improve the quality of the lives of patients around the world, while positioning the enlarged group for long term profitable growth."

Talecris Chairman and CEO Lawrence D. Stern commented, "We believe that Grifols' well-established reputation, know-how and expertise will enable the combined entity to meet the needs of more patients. Our employees will benefit from the opportunities available to them as part of a larger, global organization committed to the expansion of Talecris' existing business, the development of our pipeline products, and the maintenance of our culture of compliance and quality. Importantly, our stockholders will realize a compelling premium and benefit from the ability of the combined business to accelerate key gross margin improvement opportunities within Talecris."

Financial Details and Closing Conditions

Grifols will acquire all of the common stock of Talecris for $19.00 in cash and 0.641 newly-issued non-voting Grifols' shares for each Talecris share. Based on the closing price of Grifols' ordinary shares as of June 4th, 2010 and prevailing Euro-Dollar exchange rates, this represents an implied price of $26.16 per Talecris share, which constitutes a premium of 53% to the average closing price of Talecris common stock over the last 30 days. The total implied offer value for Talecris is $3.4 billion (euro 2.8 billion) and the resulting transaction value, including net debt, is approximately US$4.0 billion (euro 3.3 billion).

The newly-issued non-voting Grifols shares will be listed on the NASDAQ Global Market and the Mercado Continuo (Spain) and will carry the same dividend and economic rights as Grifols' ordinary shares. The Boards of Directors of both Grifols and Talecris have unanimously approved the transaction and recommended it to their respective shareholders.

The acquisition is expected to generate approximately $230 million in operating synergies from a more efficient plasma collection network, optimized manufacturing sales, marketing and R&D, which Grifols expects to realize over the next four years with an associated one-time cost of $100 million. The transaction is expected to be accretive to earnings in the first year and produce meaningful accretion from year two. The combined company will have pro-forma annual revenues of approximately $2.8 billion with 58% coming from North America, 28% from Europe and 14% from the rest of the world.  

The transaction's financing is fully committed by a syndicate led by Deutsche Bank, Nomura, BBVA, BNP Paribas, HSBC and Morgan Stanley. The merger agreement has no financing contingency. After the transaction, Grifols anticipates that its initial net debt to EBITDA ratio will reach approximately five times. Grifols expects the combined company to generate significant free cash flow over the near term, which together with the synergies will enable it to reduce leverage rapidly. Grifols expects a progressive reduction in debt ratios to approximately three times EBITDA by year-end 2012 and below two times by year-end 2014 even as key capital programs are sustained.  

The transaction is subject to customary closing conditions, including antitrust and regulatory review, and requires the approval of each company's shareholders. The leading shareholders of Grifols have agreed to vote their shares in favor of the transaction and an affiliate of Cerberus Capital Management, L.P., which owns approximately 49% of the outstanding Talecris common stock, has entered a similar agreement.  The transaction is expected to close in the second half of 2010.