CSL sells JRH division for US$370m

CSL (ASX: CSL) has sold its JRH Biosciences cell culture reagents division to US company Sigma-Aldrich for US$370 million (about AUD$492 million) in cash.

According to CSL managing director Brian McNamee, it's an outstanding result that unlocks significant value for shareholders -- the company paid US$20 million for JRH, which was then operating at a loss, in 1994. The book value at the end of the 2003-2004 financial year was AUD$137 million and the division, which employed around 400 people in the US, UK and Australia, was responsible for about 15 per cent of CSL's business.

"The Board is delighted that Sigma-Aldrich has recognised the strategic value of JRH's expertise in the science associated with cell culture and sera and the quality of its operations and people", McNamee said.

McNamee said the sale was an important step in reshaping CSL as a human biopharmaceuticals company, comprising its plasma business as well as its pharmaceutical and biotechnology business. And he noted that while the proceeds of the sale could have an impact on the company's capital structures, the JRH division was not sold off purely for the cash.

"The timing was more to do with the market opportunity than a strategic need for cash," he said.

"JRH faced issues going forward. It needed to broaden in order to compete with companies like Invitrogen."

Finance director Tony Cipa said the company was not yet in a position to comment on the use of the sale proceeds, although funding of R&D activities and capital management initiatives are on the table.

McNamee said that funding internal R&D programs would be a priority, although the company would look at acquiring undervalued assets from elsewhere in order to fill out its R&D pipeline.

The sale is subject to normal purchase conditions and adjustments, including regulatory approval from the US antitrust agency, and is expected to be completed in the first quarter of the 2005 calendar year.