Fresenius SE Offers EUR3.1 Billion For Rhoen-Klinikum
04/26/2012| 07:59am US/Eastern
-Fresenius aims to merge Rhoen-Klinikum with Helios unit to create largest hospital operator on market
-The EUR3.1 billion offer depends on a minimum acceptance threshold of 90% plus one share
(Adds company and analyst comment from the second paragraph.)
By Harriet Torry
Health care company Fresenius SE (>> Fresenius SE & Co KGaA) Thursday offered EUR3.1 billion in cash for private hospital operator Rhoen-Klinikum AG (>> Rhoen-Klinikum AG), intending to merge it with Fresenius' Helios unit to double the size of its hospital business and create Germany's largest private hospital operator with targeted sales of EUR6 billion.
Fresenius spokesman Joachim Weith told Dow Jones Newswires the company plans to finance the deal with as much outside capital and as little equity as possible, as in past acquisitions.
It will fund the EUR22.50 per share deal through a syndicated loan, a bond issue, and through equity instruments of up to EUR1 billion. Fresenius majority shareholder Else Kroener Fresenius Foundation intends provide a high double-digit euro million amount.
Rhoen-Klinikum shares soared on the news, trading 46% higher at EUR21.60 at 1112 GMT. Fresenius shares, however, were down 2.1% to EUR71.86--having dropped to EUR68.60 earlier in the session, while Germany's DAX was up 0.4%--on the news that it will pay a premium of 52% to Rhoen-Klinikum's Wednesday closing share price.
Fitch Ratings said the transaction will be approximately 75% debt-funded, and affirmed the company's BB+ rating, saying Fresenius has a good track record in integrating past acquisitions.
Fresenius spokesman Weith didn't rule out a capital increase, although he said Fresenius has no plans to sell part of its roughly 30% stake in unit Fresenius Medical Care AG & Co. KGaA (FMS) to finance the deal.
Fresenius Medical Care "is and remains a core business for us," Weith said.
Fresenius plans to merge Rhoen-Klinikum with hospital operator Helios, and according to Weith their combined market share would equate to about 8% of the EUR77 billion German hospital market. Fresenius said in a statement that a few hospitals may need to be divested to secure antitrust clearance.
Analysts generally welcomed the deal, saying it makes sense strategically and would enable cost synergies needed to compensate price increases in the industry.
The deal, expected to close in the third quarter, will be the latest in a series of acquisitions by Fresenius SE. In August last year, its Fresenius Medical Care AG & Co. KGaA (FMS) unit bought two U.S.-based dialysis care companies for a total of more than $2 billion. It also bought APP Pharmaceuticals in 2008, for $3.7 billion.
- By Harriet Torry, Dow Jones Newswires: +49 69 29725 511: firstname.lastname@example.org
(Heide Oberhauser-Aslan contributed to this article.)