Fresenius Kabi Buys APP to Enter U.S. Generics Market

By Angela Cullen

July 7 (Bloomberg) -- Fresenius SE, owner of the world's largest provider of dialysis, agreed to buy APP Pharmaceuticals Inc. for $3.7 billion to enter the U.S. market for generic intravenous medicines.

APP shareholders will receive $23 a share and tradable rights that may generate as much as $6 a share, payable in 2011, Bad Homburg, Germany-based Fresenius said in a statement on DGAP wire today. The offer, excluding the tradable rights, is 29 percent more than APP's closing price of $17.82 on July 3, the last day the shares traded.

The acquisition gives Fresenius's Kabi nutrition unit more than 100 patent-free products for hospital patients receiving cancer, intensive care and infection treatments as well as anesthetics. Fresenius expects the takeover to be earnings- neutral in the first year and add ``clearly'' to profit in the second year.

``The acquisition is an important step in Fresenius Kabi's growth strategy,'' the German company said in the statement. ``This North American platform provides further attractive growth opportunities for Fresenius Kabi's existing product portfolio.''

APP, based in Schaumburg, Illinois, is targeting sales of $730 million to $750 million this year and adjusted earnings before interest, tax, depreciation and amortization of $285 million to $300 million. The U.S. company, founded by Patrick Soon-Shiong, will merge with a U.S. subsidiary of Fresenius Kabi.

Soon-Shiong, who owns more than 80 percent of APP, agreed to sell his stake. APP's board has approved the transaction.

To contact the reporter on this story: Angela Cullen in Frankfurt at acullen8@bloomberg.net