Grifols SA (GRFS) announced on Monday that it has acquired plasma assets in North America and a plasma facility in Montreal from South Korea’s Green Cross Pharma for a total of $460 million.
Shares rose 2.4% to $20.13 in Monday’s pre-market trading. As part of the deal, the Spanish pharmaceutical company purchased 11 plasma collection centers and two purification plants in the U.S., as well as a Montreal-based plasma fractionation facility. The investment is part of Grifols’ plan to become the only large-scale commercial manufacturer of plasma products in Canada, with a capacity of 1.5 million liters a year to secure plasma-protein-product supply.
The company added that Canada is a market with one of the highest rates of plasma consumption per capita in the world and one with significant growth potential. A pioneer in the plasma industry, Grifols transforms collected plasma into essential medicines to treat chronic, rare and, at times, life-threatening conditions.
“It has been a very meditated decision to invest in the midst of these unprecedented circumstances,” said Grifols co-CEO Raimon Grífols Roura. “This pandemic underscores the need to support robust and sustainable health infrastructures that, in case of other emergent pathogens in the future, will help ensure the availability of plasma medicines.”
Grifols said it won’t need any new financing to fund the acquisition, which it expects to close before the end of this year. Upon completion of the transaction certain net worth, working capital and cash targets have been guaranteed, the company said. It plans to be ready to manufacture IVIG and Albumin in the facilities to supply the Canadian market starting in 2023.
Shares in Grifols have dropped 16% this year, while Wall Street analysts have a cautiously optimistic outlook on the stock with a Moderate Buy consensus. Looking ahead, the $31.11 average analyst price target implies a promising 58% upside potential in the shares over the coming year. (See Grifols stock analysis on TipRanks)
Meanwhile, JPMorgan analyst James Gordon lowered the stock to Hold from Buy and cut the price target to $21 from $25.50, saying that he sees little room for positive earnings momentum amid longer-term competitive threats.
Therefore, he believes that the current valuation fully reflects the company’s “strong” medium-term outlook.
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