Is the CSL (ASX:CSL) share price a buy right now?

Could CSL be a buy after its announced acquisition?

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Is the CSL Limited (ASX: CSL) share price a buy after the biotech recently announced an acquisition?

What is the acquisition?

CSL has announced that it and Vifor Pharma, a global pharmaceutical company with a speciality in renal disease and iron deficiency, has entered into a definitive agreement under which CSL will launch an all-cash 'tender offer' to buy all of Vifor Pharma shares for US$179.25 per share.

This offer is a 40% premium to the unaffected 60 trading day volume weighted average price for the shares as of 1 December 2021. This is large deal, it puts the total value of the business at A$16.4 billion.

The tender offer has been unanimously recommended for acceptance by Vifor Pharma's board of directors. Vifor's largest shareholder, which owns 23.2% of the business, has agreed to tender its shares.

What are the benefits of the deal for CSL and the share price?

CSL said it would expand its leadership across an attractive portfolio focused on renal disease and iron deficiency.

It also complements CSL's existing therapeutic focus areas including haematology, thrombosis, cardiovascular and transplant, as well as having a high-quality pipeline.

CSL said that its global reach, research and development capabilities and resources will help the delivery of Vifor Pharma's products to patients.

This is expected to add to underlying net profit (NPATA) per share in the low to mid teens in the first full year of CSL ownership – this includes the full cost synergies that are expected to be delivered.

CSL is funding the deal through a combination of debt and a capital raising.

The ASX healthcare share said that this acquisition further advances its 2030 strategy to create value by adding a high growth, cash generative and sustainable business which complements and expands the global leadership positions of CSL Behring and Seqirus.

Is the CSL share price good value when thinking about this deal?

Morgans is a fan of the deal for CSL, saying that it gives the company more growth avenues and positions it with good market share in the respective sectors.

This broker reckons that CSL shares are a buy, with a price target of $334.70. That suggests a potential upside of more than 20% over the next 12 months. At the current CSL share price, it values the healthcare company at 35x FY23's estimated earnings.

Citi is also a fan of the deal, also rating the CSL share price as a buy, with a price target of $340. That implies a potential upside of around 25% over the next year if the broker is right. This broker thinks the deal could add around 10% to CSL's underlying profit.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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