M & A Law Prof Blog

Editor: Brian JM Quinn
Boston College Law School

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Friday, May 29, 2009

“Vigorous Antitrust Enforcement” Begins

A couple of days ago, Michael posted about the renewed interest in “vigorous antitrust enforcement” by the Obama Administration.  Over the last couple of days there has been some movement on this front.  The WSJ reports today that the FTC just recently filed a complaint against CSL Ltd and Cerberus-Plasma Holdings to prevent CSL’s $3.1 billion acquisition of Talecris Biotherapeutics.   Why Cerberus?  Well, Cerberus has a 74% stake in Talecris. The redacted version of the FTC’s administrative law complaint is here.

The essence of the FTC’s complaint is that the acquisition of Talecris will leave the plasma therapies market too concentrated to ensure adequate levels of competition resulting in higher prices for consumers.  As evidence, the FTC notes that following the proposed acquisition, the combined entity will comprise over 80% of “alpha-1” market. In other plasma products, the post-merger entity would control between 40-80% of market in which it participates.

The deal documents are not easily available as Talecris is a private company and CSL is traded in Australia.  But the FTC”s complaint provides us some details about the merger, including that it has a $75 million break-up fee (2.4% of transaction value).  The deal's drop dead date is August 12, 2009 providing either party the right to walk if the regulatory hurdles prevent the deal from closing with the termination fee payable at that point.  The parties also entered into a separate agreement that commits CSL to supply plasma to Talecris for 5 years even if the transaction does not go forward.

CSL has indicated that they will fight this suit.  Here’s their statement, released to the Australian Stock Exchange.  CSL also had a conference call in which they provided their view of the FTC’s suit.

According to the complaint, the administrative hearing will be held in October.  Expect a motion for a preliminary injunction to prevent the deal from closing to be filed in a federal district court to be filed soon.

-   - bjmq


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