CSL enters US$25bn kidney disease market via mammoth acquisition

Wed 15 Dec 21, 3:21pm (AEST)
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Key Points

  • CSL is seeking to raise $6.4bn to help fund its $16.4bn acquisition
  • Swiss-based Vifor Pharma will help CSL enter the growing global kidney disease treatment market
  • Acquisition expected to be "low-to-mid teens" earnings accretive

Longstanding market darling CSL (ASX: CSL) has initiated its biggest capital raising since inception. CSL is asking investors to front up $6.3bn to help fund the $16.4bn acquisition of Swiss-based Vifor Pharma. 

The acquisition enables CSL to extend the durable growth narrative into the US$25bn global kidney disease treatment market. 

“Vifor Pharma enhances CSL’s patient focus and ability to protect the health of those facing a range of rare and serious medical conditions,” said CSL CEO and managing director Paul Perreault. 

“Vifor Pharma will also expand our presence in the rapidly growing nephrology market, while giving us the opportunity to leverage our complementary scientific expertise,” he added.

Strategic rationale 

CSL eyes kidney disease treatment as another growth avenue, owing to an aging population and an increase in chronic kidney disease risk factors such as diabetes and heart disease. These markets have grown steadily over the past decade, with a “high single-digit annual growth rate”. 

From an earnings perspective, the deal is expected to be “low-to-mid teens” accretive in terms of net profit after tax and amortisation. The Group is also expected to benefit from US$75m in pre-tax cost synergies, phased across three years post acquisition.  

On a pro forma basis, this would give FY21 revenues a 19% kick. 

Equity, debt and existing cash 

CSL will undergo a $6.3bn institutional placement representing approximately 5.1% of current shares on issue. 

The placement price will be determined via a bookbuild process commencing at $273 a share, or a 8.2% discount to its last closing price. 

The rest of the funds will be drawn from a $8.4bn debt bridge facility as well as $2.8bn in existing cash/undrawn facilities. 


CSL shares have gone nowhere since January 2020, owing to the impact of the pandemic on plasma collections and higher costs. Plasma collections have improved from last year’s lows but have yet to break above pre-covid levels. 

This offset a strong performance from the company's influenza vaccine business, which delivered a 30% jump in revenue after administering a record 130m vaccine doses.

“At the half-year results, we foreshadowed margin easing as a result of increased plasma costs, this will continue into FY22,” said Perreault during the company’s FY21 result. 

As a result, CSL anticipates its FY22 profits to go backwards between -5.3% and -9.4% against the previous period. 

Brokers bump up price targets 

Brokers were quick to revise their ratings and target prices for CSL after its Vifor Pharma announcement. 

Morgan Stanley and Ord Minnett retained hold recommendations, Citi upgraded the stock from neutral to buy and Macquarie’s outperform rating was unchanged, according to FN Arena.   

Broker consensus rates CSL as a Buy with a target price of $318.73 or 7.3% upside to its last close price on Monday.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University and was Vice President of the University Network for Investing and Trading (UNIT). He is an avid swing trader, and drawn to breakouts and technical set ups. Outside of writing and trading, Kerry is a huge UFC fan, loves poker and bouldering.

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