Grifols to Acquire 26.2% Stake in Shanghai RAAS for $1.9 Billion to Expand Plasma-Derived Therapeutics and Diagnostic Solutions in China

VCBeat (WeChat Official Account: vcbeat) has learned that on March 8, 2019, Grifols announced it would acquire a 26.2% stake in Shanghai RAAS for $1.9 billion, as part of a strategic alliance agreement to produce, market, and develop plasma-derived products and transfusion diagnostic solutions in the Chinese market. Upon completion of the transaction, Grifols will become the second-largest shareholder of RAAS, after Creat Group Corporation, which holds a 26.7% stake in the company. RAAS holds a 25.8% stake, with the remaining capital distributed among institutional investors and minority shareholders.

Grifols engaged Osborne Clarke of Louisiana, Proskauer Rose, and JunHe as legal counsel, Nomura Securities as lead financial advisor, and China International Capital Corporation as financial advisor.

In addition, Grifols will appoint three members to the board of directors of Shanghai RAAS and will appoint a Head of Quality and Manufacturing to ensure the quality assurance agreement within the strategic alliance, namely, to ensure that all of Shanghai RAAS’s activities in plasma collection and the production of plasma-derived medicinal products comply with the most stringent international quality control standards. To this end, Grifols will appoint officers to provide advice and oversee Shanghai RAAS’s quality and manufacturing operations.

Under the agreement, Grifols acquires shares in Shanghai RAAS in exchange for 45% of the economic interests and 40% of the voting rights in its U.S. subsidiary, Grifols Diagnostic Solutions. Grifols Diagnostic Solutions has a market valuation of $4.28 billion, and Shanghai RAAS’s share price is RMB 7.50 per share. In addition to subscription rights that may increase capital, Grifols will retain veto rights over matters such as equity issuance, asset divestitures, mergers, and amendments to the bylaws, as well as operational and economic control over Grifols Diagnostic Solutions (GDS).

Grifols stated that China has become one of the fastest-growing markets for blood-derived products in recent years. With the increasing adoption of cutting-edge diagnostic solutions that enhance the safety of blood and plasma donations, demand for nucleic acid testing (NAT) technology is expected to rise significantly. This acquisition represents a crucial step in Grifols’ sustainable growth and long-term strategy. The agreement will strengthen Grifols’ global expansion strategy, promote its commercial development in China, and create value for all its divisions, including the Bioscience and Diagnostic segments.

Between 2009 and 2017, Grifols completed five rounds of investment and four mergers and acquisitions. In its most recent investment round, it invested $35 million in GigaGen. Its latest acquisition occurred in January 2017, when Grifols acquired Hologic’s NAT Donor Screening Unit for $1.9 billion.

For Shanghai RAAS, the agreement will enable it to diversify its business operations. Upon completion of the acquisition, Shanghai RAAS will not only be able to utilize Grifols’ NAT technology to screen plasma donations across its network of 41 plasma collection centers but will also become the exclusive distributor in China for Grifols’ plasma-derived products and transfusion diagnostic solutions.

Grifols, founded in Barcelona, Spain, in 1940, is a global healthcare company and an industry leader in the production of plasma-derived medicines, with more than 20,000 employees across 30 countries. Today, together with its subsidiaries, Grifols researches, develops, manufactures, and markets plasma derivatives, intravenous therapies, enteral nutrition products, diagnostic systems, and medical supplies worldwide.

Grifols’ business is primarily divided into three segments: Bioscience, Hospital, and Diagnostic Science. The Bioscience division is engaged in the research, development, production, and commercialization of plasma-derived therapies. The Diagnostic division focuses on the research, development, manufacturing, and sales of diagnostic products for laboratory analysis, including products for hospital blood banks and transfusion centers.

Shanghai RAAS Blood Products Co., Ltd. was established in 1988 and listed on the SME Board of the Shenzhen Stock Exchange in 2008, becoming a well-known blood products company in Asia. In October 1988, in response to the World Health Organization’s call for “large countries to achieve self-sufficiency in blood products,” and with the support of the Shanghai Municipal People’s Government, the Shanghai Municipal Health Bureau, and the Ministry of Health, Mr. Huang Kai, a Vietnamese-American, came to China and co-founded China’s first Sino-foreign joint venture blood products manufacturing enterprise with the Shanghai Blood Center.

The actual controller of Shanghai RAAS is Huang Kai, who has 40 years of experience in the blood products industry. In his early career in the United States, his core business involved the collection and supply of specialized immune plasma, such as hepatitis B hyperimmune globulin plasma, CMV plasma, and VZV plasma. He also established a laboratory to provide testing services for U.S. blood product manufacturers. Over the course of more than a decade, Mr. Huang acquired multiple plasmapheresis centers located in the western United States, which he later transferred to other companies within the industry.

(Compiled by Wang Shuijing)