(Reuters) – Australia’s CSL Ltd , the world’s largest blood products company, said on Monday it had agreed to buy Novartis AG’s global influenza vaccine business for $275 million, part of the Swiss drugmaker’s drive to focus on its best assets.
The sale of the flu business will conclude Novartis’ overhaul of its units which it had flagged in April, aimed at strengthening its cancer business and exiting underperforming operations.
Novartis said in April GlaxoSmithKline was buying its vaccines business, excluding flu, for $5.25 billion plus potential milestone payments of up to $1.8 billion and royalties.
The sale of its flu business to CSL will trigger an exceptional pretax impairment charge of approximately $1.1 billion, as the selling price is below the book value of the assets, Novartis said in a statement on Monday.
The charge will be excluded from the Swiss drugmaker’s core results and a one-time operating income gain expected from the deal with GSK will compensate for the charge, it said.
Combining the Novartis unit with CSL subsidiary bioCSL would create the No.2 player in the $4 billion global influenza vaccine industry, CSL said in a statement to the Australian stock exchange.
CSL, which said it would fund the deal with surplus cash, estimated integration costs at $100 million, while synergy benefits were seen at $75 million a year by 2020.
The deal is expected to close in the second half of 2015, pending regulatory approval, Novartis said. (Reporting by Lincoln Feast in Sydney and Alice Baghdjian in Zurich; Editing by Robin Pomeroy and David Holmes)