Terumo Medical Corporation has bought CaridianBCT for $2.63 billion, in the latest of a series of cross-border acquisitions by Japanese healthcare firms.
CaridianBCT started life as the blood-related division of a Swedish company called Gambro, which was bought in 2006 by Investor AB, a Nordic-based industrial-holding and private-equity firm. A year later, it restructured Gambro into three separate companies, one of which was Colorado-based CaridianBCT.
In the deal struck with Investor, Terumo has agreed to take on CaridianBCT with the debt on its books for an enterprise value of $2.63 billion, which translates to a multiple of 15 times trailing 2010 earnings.
The buyer and target have complementary businesses. Since the 1960s Terumo has grown to become the fifth-largest player in the blood-transfusion industry, while CaridianBCT provides blood-processing technologies for blood banks, hospitals, biotechnology and therapeutic applications. The blood-processing industry has started growing at a rapid pace, fuelled by ageing populations in developed countries, which are increasing the need for treatments that need blood, and in emerging markets spurred by the development of healthcare infrastructure.
The deal enables Terumo, which is active primarily in blood banking, transfusion and cellular therapy, to offer a wider range of blood-processing technologies -- while Terumo is established in whole-blood collection, CaridianBCT's expertise lies in automated collections and therapeutic systems.
The acquisition will also bolster Terumo's international presence, adding strength in the US, Europe and Latin America.
Terumo set itself a target earlier this year of achieving revenue of ¥1 trillion ($12 billion) within the next 10 years, which means more than trebling its current ¥316 billion revenue. Adding the half a billion dollars of revenue CaridianBCT earned in 2010 to Terumo’s current revenues in its blood division will increase its revenues in this area to around ¥70 billion. Further, CaridianBCT operates in a fast-growing part of the blood industry and has achieved an average compound annual sales growth of 12% since 2000. Terumo will be counting on maintaining or even bettering that performance. After the deal, revenues from Terumo's blood transfusion business will represent 18% of its turnover, from 8% currently.
Particularly attractive to Terumo is the apheresis technology CaridianBCT owns, which allows blood to be separated into constituents such as platelets and plasma. This “is a key driver for this transaction, particularly as the increasing number of cancer patients in the aging populations of the developed world will increase the demand for platelet transfusion to counteract the effects of anticancer drugs and radioactive treatments”, said Terumo in a written statement.
The deal follows two other recent outbound healthcare acquisitions by Japanese companies this year, although this is by far the largest. Daiichi Sankyo has struck a deal to buy Plexxikon for up to $935 million as it seeks to expand into cancer medicines in the US, while Kyowa Hakko Kirin bought Scottish drug manufacturer ProStrakan for £292 million pounds ($475 million) a week earlier.
Goldman Sachs advised the sellers with legal advice provided by Shearman & Sterling.