Own CSL (ASX:CSL) shares? Here’s how the $17bn Vifor Pharma acquisition will boost its growth

Here’s what you need to know about the Vifor Pharma acquisition…

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Biotherapeutics giant CSL Limited (ASX: CSL) recently announced the acquisition of Vifor Pharma for $17 billion. While its shares have not fared overly well since then, the transaction is expected to be a boost to its long term growth.

But just how much of a boost? To find out, I thought I would take a look at what analysts are saying about this massive acquisition.

The Vifor Pharma acquisition

CSL has signed an agreement to acquire Swiss biotech giant Vifor Pharma for US$12.3 billion (A$17.2 billion) in cash.

Management expects the deal to expand its leadership across an attractive portfolio focused on renal disease and iron deficiency. In addition, it highlights that Vifor has a high quality pipeline and complements CSL’s existing therapeutic focus areas. These include Haematology, Thrombosis, Cardiovascular, and Transplant.

The response

Commenting on the acquisition, Goldman Sachs said: “The transaction expands its blood products franchise and provides exposure to a growing renal disease market (>US$25bn by 2026), where the prevalence of Chronic Kidney Disease (CKD) is expected to grow at +8% pa. Vifor’s product portfolio also has broad complementarities to CSL’s development pipeline, notably CSL112 in reducing the incidence of recurrent cardiovascular episodes and CSL889 in treating Sickle Cell Anaemia.”

Goldman notes that the deal is expected to boost CSL’s earnings in the coming years.

It commented: “The transaction is expected to be low-to-mid teens NPATA per share accretive in the first full year of CSL ownership, including US$75m full rate cost synergies. The synergies are expected to be phased in a 3-year period post acquisition close.”

This sentiment was echoed by the team at Citi. It said: “We calculate the acquisition to be ~9% accretive to NPATA per share (NPAT before acquisition-related amortization) – a proxy for cash flow. Including amortization, the transaction is expected to be “modestly accretive” to EPS.”

In light of the above, Citi is forecasting earnings per share of $6.92 in FY 2022, $9.16 in FY 2023, and then $10.27 in FY 2024.

Are CSL’s shares in the buy zone?

Goldman Sachs is helping CSL with its transaction. As a result, it is unable to provide a recommendation at this stage.

However, Citi can make recommendations and currently has a buy rating and $340.00 price target on CSL’s shares. Based on its current share price, this suggests potential upside of 21% for investors over the next 12 months.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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