Fresenius SE said Monday it has agreed to buy U.S. generic drug maker APP Pharmaceuticals for $3.7 billion in cash in a deal that will give the German health care company more opportunities in the North American market for drugs administered intravenously.
Fresenius will pay $23 a share for the Schaumburg, Ill.-based APP Pharmaceuticals in the deal, along with a registered and tradable contingent value right that could result in as much as $6 a share, provided APP reaches adjusted pretax profit targets from 2008 to 2010, the companies said in a statement.
The $23 a share price is a 29 percent premium over APP Pharmaceutical's closing price on Thursday, the last day of trading in New York before the July Fourth holiday.
APP Pharmaceutical's shares climbed $5.37, or 30.1 percent, to close at $23.19 Monday. Fresenius shares fell almost 7 percent to 51.59 euros ($80.24) in trading in Frankfurt.
APP will be combined with the U.S. subsidiary of Fresenius Kabi, the companies said. APP founder Dr. Patrick Soon-Shiong, who holds more than 80 percent of APP's stock, was on board for the deal.
"The combined company will allow for the rapid globalization of APP's portfolio with the same high levels of quality and patient commitment for which we have become known, while at the same time providing a more comprehensive and complementary offering of injectable pharmaceuticals, devices and delivery systems to customers worldwide," Soon-Shiong said in a statement.
APP employs some 1,400 workers and operates production facilities in New York, Puerto Rico, Toronto and in Illinois. Its drug portfolio includes more than 100 products used for oncology, intensive care and anesthesia, along with fighting infections.
In 2007, APP reported a pretax profit of $253 million on sales of $647 million.
"APP is a fast-growing, highly profitable company and a strong management team that has an excellent market position in the U.S.," Fresenius chief executive Ulf Mark Schneider said in a statement. "Our firm very much shares APP's dedication to quality and medical excellence for the benefit of patients. The acquisition provides significant growth opportunities for Fresenius Kabi."
He said the addition of APP will let Fresenius Kabi be able 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."
Fresenius employs more than 116,000 workers worldwide and last year posted sales of 11.4 billion euros ($17.9 billion).
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