CSL, a company that develops and manufactures vaccines and plasma therapies, raised $1.5 billion in AustraliaÆs largest ever overnight placement. The deal was launched on the same day that the company announced that it had signed an agreement to purchase an American competitor, Talecris Biotherapeutics.
The shares were priced at A$36.75 ($32.25), or a 5.8% discount to the last sale price of A$39 at the close of trading on Monday. This was the middle of a discount range that went from 0% to 11.5%. The offering consisted of 47.5 million primary shares.
Around 200 accounts participated in the CSL deal. One source estimates that two-thirds of the shares were taken up by institutional investors keen to maintain the weighting of their stakes on a pro-rata basis. The book was described as being very well covered with strong participation from global long-only funds. ôWhen you strip out the pro-rata aspect it was many, many times oversubscribed,ö says the source.
CSL opened the deal at noon Sydney time on Wednesday, just after the company released its full-year results for 2008, and closed the books at 9am yesterday. Profits after tax were $702 million in the year up until June 30, up 30% on the year before; while total revenues were up 15% to $3.8 billion. The company has been affected by adverse currency movements, and if this is factored out, profits after tax were up 45% and revenue was up 23%. For the financial year ending 2009, the company expects its net profit after tax to rise to between $810 and $850 million.
The proceeds from the block trade will be used to partly fund the acquisition of Talecris. The $1.5 billion raised yesterday will not cover the full cost of the $3.1 billion purchase. To complete the deal, the company will use $350 million in cash, with the remainder coming from debt. Before taking out any long-term debt, the company will wait until the acquisition has been approval by US anti-trust regulators. In the meantime the company has received a bridging loan from Merrill Lynch, the bank that arranged the placement and advised on the acquisition.
The source says that some conservative investors were concerned about the fact that the acquisition is awaiting regulatory approval, and is therefore not certain; but generally investors were comfortable with the expected accretion that the union of the two companies will bring about.
According to Dealogic, this was the second largest Australian stock offering so far this year, behind WesfarmersÆ follow-on in April, which brought in $2.6 billion. It pushes Australian ECM stock volume to $16.4 billion from 205 issues this year, down 32% on the $24 billion in the same period last year; and it puts Merrill Lynch in second place in the Australian ECM bookrunner rankings, behind Goldman Sachs.
CSLÆs deal was not the only large block to kick-off on Tuesday. In Taiwan, Philips sold off the last of its stake in TSMC, the leading player in the semiconductor foundry industry. Philips raised a total of $700.6 million from the sale, based on an exchange rate of NT$31.25 to the dollar.
The book was opened on Tuesday afternoon at 2pm, and closed six hours later with 382.8 million shares priced at NT$57.2 each, a 6.5% discount to the last trading price on Tuesday of NT$61.2. This is at the low end of a tight range of NT$57 to NT$58.8, with a corresponding discount range of 4% to 7%.
At the time the placement launched, TSMCÆs share price was already up 8.5% on the start of the month; but it should be remembered that the sale was part of PhilipsÆ long-term plan to offload its stake in the company. The Dutch company started its exit from TSMC in March last year by selling $1.75 billion worth of stock. In May of last year it proceeded to sell $2.56 billion of American Depositary Receipts. Philips was a co-founder of TSMC in 1987, but as it has moved out of the semiconductor business, it has gradually sold off its 51% stake. Goldman Sachs has worked on all three deals.
The book was one-and-a-half times covered and contained 20 investors that were exclusively long funds. Around 50% of the demand came from Asia with the rest was split between the US and Europe.
This is the fourth largest follow-on in Asia excluding Japan this year. It sits among a cluster of similarly sized deals just over $700 million; including follow-ons from Belle International Holdings and China Shenhua Energy in April, which raised $703 million and $708 million respectively. The largest is still LG DisplayÆs $1.07 billion follow-on in March.
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