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Grifols Buys Novartis' Transfusion Diagnostics Business

Stocks in this article: GRFS NVS

NEW YORK ( The Deal) -- Barcelona drugmaker Grifols (GRFS) on Monday, Nov. 11, went shopping in California for a second time this year, picking up the Emeryville-based blood transfusion diagnostics business of Swiss drug company Novartis (NVS).

Grifols would pay $1.68 billion for the unit, which makes equipment and chemicals for screening donated blood for infectious diseases. The division had sales last year of $565 million.

"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," said Novartis CEO Joseph Jimenez in a statement.

Grifols earlier this year bought 35% of Hayward, Calif.-based Aradigm for $45.4 million as part of a drug development deal. The duo are developing treatments for lung diseases, and Grifols will commit as much as $90 million to the cooperation.

The buyer is also the world's third-largest provider of plasma-based therapies, making a reliable blood supply essential for the Spanish pharmaceuticals company.

Novartis has made few major deals in recent months. Analysts said the sale would allow the company to focus on more pressing matters.

"The deal's positive since the unit is lacking the necessary size to compete and is less profitable then others in the group," wrote Independent Research GmbH analyst Christoph Schondube in a note. He has a hold rating on Novartis shares.

Novartis acquired the blood transfusion diagnostics division in 2006 when it spent $5.4 billion to buy the outstanding 56% of Emeryville vaccine maker Chiron.

Novartis shares gained 1.1%, or 0.75 Swiss francs, to 71.70 Swiss francs ($77.94) in afternoon Zurich trading, while Grifols rose 5.2%, or euro 1.61 euros, to 32.56 euros ($43.64) in Madrid.

-- Written by Andrew Bulkeley

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