Fresenius to Acquire APP Pharma for $3.7 B

123jump.com Staff
07 Jul, 2008
New York City

German healthcare concern Fresenius agreed to pay $23 a share for the US injectable drug maker APP Pharmaceuticals. Fresenius will assume APP

[R]10:00AM New York — Fresenius Medical Care agreed to acquire APP Pharmaceuticals for $3.7 billion.

Fresenius Medical Care, the German healthcare concern said on Monday it would buy APP Pharmaceuticals for $3.7 billion cash, hoping to carve niches in the U.S pharmaceuticals and injectable drugs industry.

Through its U.S subsidiary, Fresenius Kabi, the German health provider will pay $23 for every APP share, placing 29% higher than July 3 closing price of $17.83. U.S shares did not trade July 4, which was a public holiday. APP will be swallowed into Fresenius Kabi.

Fresenius could pay up to $4.7 billion or an additional $6 per share for APP if the latter achieves set profit targets between now and 2010. The German health group has also agreed to inherit APP’s outstanding debt of $940 million.

Shares of Fresenius fell as much as 0.38% or €1.05 to €35.76 in afternoon trading in Frankfurt. The stock has reached a high of €39.30 over the past 52 weeks and traded at a low of €29.53.

Fresenius chief executive Ulf Mark Schneider said the acquisition would help improve market share in the U.S economy. APP sells in excess of 100 different hospital injections.

“The acquisition provides significant growth opportunities for Fresenius Kabi,"" he said adding that the inclusion of APP will enable the group to ""market its product range in the U.S. Fresenius Kabi''s international marketing and sales network will allow us to sell APP''s products globally.""

APP founder Soon-Shiong, who agreed to sell his 80% stake in the group said: “The combined company will allow for the rapid globalisation of APP''s portfolio with the same high levels of quality and patient commitment…while at the same time providing a more comprehensive and complementary offering of injectable pharmaceuticals, devices and delivery systems to customers worldwide,""

In 2007, Fresenius achieved sales of €11.4 billion while APP posted a profit of $253 million. Last year, Fresenius acquired Renal Solutions, adding to its kidney treatment units.

For 2008, APP has targeted sales in the range $730 million to $750 million. EBIT is expected between $285 million to $300 million.

In June, health care provider Daiichi Sankyo offered $4.6 billion to takeover Ranbaxy Laboratories of India while Sanofi-Aventis SA tabled $1.96 billion for control of Zentiva NV.

Fresenius Medical Care provides kidney dialysis services and manufactures and distributes equipment and products used in the treatment of dialysis patients. The Company also offers clinical laboratory testing and diagnostic testing services and provides home infusion, respiratory therapy, ultrasound, and echo-cardiography.

APP makes injectable drugs that treat colon and rectum cancer amongst other ailments.