Why Is CSL Stock Price Trading Lower After Vifor Deal?
CSL’s shares are back from their trading halt, however, not with a positive come back. Thus, the shares are down by more than 8% after the firm proceeded to raise US$4.5 billion. What happened?
The CSL share price has returned from its trading halt on Thursday morning. At the time of writing, the biotherapeutics company’s shares are down 8.16% to $273. The company’s share price was placed into a trading halt on Tuesday whilst it launched an equity raising.
CSL has completed the institutional component of the capital raising. Thus, the biopharmaceutical firm raised an equivalent of $6.3 billion at $273 per new share. This represents an 8.2% discount to its last close price.
We have seen CSL receiving strong support for its placement from existing shareholders and new investors.
Therefore, CSL will now push ahead with its non-underwritten US$534 million share purchase plan. These funds will be raised at the lower of the placement price and at a 2% discount to the five-day VWAP of CSL’s shares.
Nonetheless, this was the largest ever primary equity raise in Australia. CSL is now preparing for its share purchase plan for eligible shareholders. This will be launched on Tuesday, December 21, 2021.
CSL is acquiring the Swiss Biotech giant: Vifor
CSL plans to use the proceeds from the equity raising, along with new debt and existing cash reserves to fund the acquisition of Vifor Pharma. Vifor is the Swiss biotech giant which could potentially be taken over for $17.2 billion in cash.
This deal is a very important transaction for CSL. Thus, this acquisition expands the company’s leadership across an attractive portfolio focused on renal disease and iron deficiency. The deal also highlights that Vifor has a high-quality pipeline and complements CSL’s existing therapeutic focus areas. Vifor will bring to CSL expertise in Haematology, Thrombosis, Cardiovascular, and Transplant.
This takeover will bring to CSL an outstanding team and a leading portfolio of products across renal disease and Iron Deficiency. Moreover, Vifor will complement CSL business development effort and licensing strategy. Vifor Pharma will also expand its presence in the rapidly growing nephrology market. This whilst allowing CSL to leverage its complementary scientific expertise.
Since the last six-month period, CSL performed in line with its major competitors, Vertex Pharmaceuticals (VRTX) and Gilead Sciences (GILD) which returned 11.72%, and 4.60%, respectively. CSL recent pullback pushed the share down to a -10.23% performance for the last six-month period. Despite the correction following Tuesday equity raising, CSL still outperforms by far Biogen (BIIB), which is in decline since the last six months down by -40.46%.