APP Pharmaceuticals shares jump on buyout offer

Shares of drug developer APP Pharmaceuticals Inc. soared Monday after German health care company Fresenius SE offered a cash buyout of $3.7 billion, or $23 per share.

Shares of APP, which sells a range of injectable cancer treatments and anti-infectives, rose $5.86, or 32.9 percent, to $23.68 in midday trading. The stock has traded between $9.56 and $25.68 over the last 52 weeks.

Fresenius' offer is part of its effort to expand into the North American intravenous drug market. The offer marks a 29 percent premium over Schaumburg, Ill.-based APP's closing price on Thursday, the last trading day before the July 4 holiday weekend.

In addition to the $23 per share in cash, the deal includes a registered and tradable contingent value right that could reach $6 per share if APP reaches certain profit targets.

Under the deal, APP will be folded into Fresenius' U.S. unit, called Kabi.

"We see this acquisition as an excellent way for Kabi to fill its strategic gap _ the missing presence in the North American market," said Piper Jaffray analyst Stephan B. Gasteyger in a note to Fresenius investors.

Fresenius will also likely experience cost savings by offering its products through APP's sales channel, he added.

Fresenius employs more than 116,000 workers worldwide and last year posted sales of 11.4 billion euros ($17.9 billion). APP employs some 1,400 workers and had revenue of about $647 million in 2007.