FRANKFURT (AFP) — The German pharmaceutical company Fresenius said Monday it would acquire APP, a US specialist in intravenously-administered generic drugs, for at least 3.7 billion dollars (2.4 billion euros).
Fresenius would pay 23 dollars per share in cash, and plans to finalise the deal by early 2009 at the latest, pending approval by competition authorities, it said in a statement.
If APP core earnings from 2008 to 2010 surpass a set target, shareholders would get an additional six dollars per share.
"This acquisition is an important step in the strategy of Fresenius Kabi (a division specialised in infusion therapy and clinical nutrition). The group thus enters the American pharmaceutical market and will play a leading role in the global market for intravenous generics," Fresenius added.
APP, which is listed on the Nasdaq exchange, posted sales of 647 million dollars in 2007, and gross operating profit of 253 million, the German group said.
With a staff of 1,400, APP has a product line of more than 100 treatments used in US and Canadian hospitals for anesthesia and treatment of cancer and other infections.
Fresenius expects to finance the purchase via loans and its own capital, and expects the transaction to return a profit within two years.
Financial director Stephan Sturm told a press conference the company had already planned in principle to carry out a capital increase, although chief executive Ulf Schneider said that did not mean a stock listing of Fresenius Kabi.
Frankfurt investors balked at the price being paid, however, and drove Fresenius shares lower in early afternoon trading.
They showed a loss of 9.72 percent to 49.22 euros, while the MDax index on which they are listed was up by 0.57 percent overall.
Dow Jones Newswires quoted Commerzbank analyst Daniel Wendorff as saying that the deal "doesn't look cheap ... but a strategic premium is justified."
Bankhaus Lampe analyst Leslie Iltgen added that there was "a price to be paid for such a strategically important decision."
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