Biotest discussing possible acquisition by Chinese investment group

Shares of German blood plasma products maker Biotest (BIO: Xetra) rocketed 26% to 25.19 euros, after the company revealed that it is in discussion with Creat Group Corporation, a leading Chinese investment group, regarding a potential business combination. Creat is a long-term strategic investor.

Creat has indicated certain key parameters of a potential combination to be implemented through a public tender offer for all common and preference shares of Biotest. The envisaged consideration is 28.50 euros per ordinary share and 19.00 euros per preference share of Biotest. This values the company at about 1.2 billion euros ($1.3 billion).

Creat has indicated its intentions not only to maintain Biotest's headquarters and corporate seat in Dreieich, Germany, and maintain Biotest's corporate name, brand and product names but also to develop the company in line with the current management business plan and to adhere to current shop and collective bargaining agreements and employee co-determination. Such intentions will be agreed upon in a business combination agreement with a term of five years.

The board of management and supervisory board welcome the discussions. A combination with Creat would support the required investments in products and facilities as well as the company's Biotest Next Level strategy.

Negotiations are ongoing and there can be no assurance that a final agreement between the parties will be reached or that any such offer will be made. Any potential transaction is still subject to final negotiations of a business combination agreement and an agreement with Biotest AG's majority shareholder, OGEL GmbH as well as finalization of due diligence and the required financing measures. In the context of these discussions, Biotest has decided to delay the Annual General Meeting, originally scheduled for 10 May 10, 2017, to a later date. Information regarding the new date will be provided in due course.

Financial results FY 2016

Meantime, Biotest announced that in the 2016 financial year, the group generated revenue in continuing and discontinued operations of 610.4 million euros ($658 million), up 3.5% of the 589.7 million euros in the previous year.

Operating earnings before interest and taxes (EBIT) increased from 37.3 million euros to 63.9 million euros (+71.3%). The EBIT-margin in the continued operations increased from 7.0% in 2015 to 11.6% in 2016. Earnings after taxes of continuing operations amounted to 34.5 million euros in the past financial year after 27.0 million euros in the previous
year.

In the 2017 financial year, the board of management expects sales of continuing operations to increase by a low-single-digit percentage. Earnings will be influenced by various factors in 2017. Besides the expected effects from the Biotest Next Level expansion project of 60 to 70 million euros including the associated clinical development and increasing ramp-up costs, the continued tense situation in the crisis regions, especially in the Middle East, could be noticeable. In addition, costs for R&D in the field of monoclonal antibodies of around 10 million euros will impact earnings in 2017. Due to the above influences, the board anticipates EBIT of continuing operations in the range of 46 to 48 million euros.