Provider of hospital-based injectable pharmaceutical products APP Pharmaceuticals, Inc today said that it had entered in to a deal to be acquired by Fresenius SE, a German healthcare group with approximately $18 billion of sales. The deal had been approved by APP's board of directors requires usual regulatory approvals.

One of the biggest deals by the healthcare group, would allow the German firm an entry in the US market.It plans to fund thr deal Fresenius plans to finance the acquisition with a mix of debt and equity to minimise the impact on its books, with the larger portion through debt.

It said Fresenius will acquire the outstanding common stock of APP for $23.00 in cash per share plus a contingent value right (CVR) that could deliver up to an additional $970 million, or $6.00 per share in cash, if the financial results of APP meet certain targets (payable in Q2 2011). The cash consideration of $23.00 per share and potential for total value of $29.00 per share represents a premium of 29 per cent and 63 per cent, respectively, over the Company's closing stock price on 3 July 2008.

Based on the cash purchase price of $23.00 per share, the transaction values the fully diluted equity capital of APP at approximately $3.7 billion; and with the CVR, if fully realized, at a value of $4.6 billion. Fresenius will also assume all of APP's outstanding debt which currently totals approximately $940 million, net of cash. In aggregate the consideration for the acquisition of APP, including the CVR, could be up to $5.6 billion.

The takeover will have no overall impact on earnings per share in the first year but will clearly boost earnings from the second year onwards, Fresenius said. It expects to close the deal at the end of 2008 or start of 2009.

Fresenius is the world's biggest dialysis company and relies on the US for the bulk of its sales. It has been expanding into related drugs areas recently, buying several European intravenous drug companies including Portugal's Laboratório de Especialidades Farmacêuticas Almiro SA three years ago.

Four years ago it acquired  Renal Care Group for  $3.5 billion.

"We are proud to have consistently provided injectable pharmaceutical products of the highest quality to patients in the acute care setting over the past decade. In Fresenius we have found a partner with the same commitment to quality and dedication to patient care," said Patrick Soon-Shiong M.D., founder and Chairman of APP. "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."

APP will join Fresenius as part of its Fresenius Kabi division. Through the acquisition of APP, Fresenius Kabi enters the US pharmaceutical market and achieves a leading position in the US injectable generics market. The worldwide presence of Fresenius combined with APP's extensive market penetration in the U.S. will create substantial global opportunities for growth for both companies.

Dr. Ulf Mark Schneider, chairman of the management board of Fresenius SE commented: "APP is a fast-growing, highly profitable company with a strong management team that has an excellent market position in the U.S. 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. With the APP platform, Fresenius Kabi will 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. We welcome APP employees to our team and very much look forward to serving the North American healthcare community."

Headquartered in Schaumburg, Illinois, APP is a leading hospital-based injectable pharmaceutical company, focusing on oncology, anti-infective, anesthetic/analgesic and critical care markets. The Company develops, produces and markets a comprehensive portfolio of over 100 hospital-based injectable products and operates three manufacturing facilities producing a comprehensive range of dosage formulations, including lyophilization.

"We are excited about joining the Fresenius family of businesses and the opportunities this combination will provide for expanding our commitment to patient care on a global basis," said Tom Silberg, President and Chief Executive Officer of APP. "Fresenius is widely recognized as a leader in global healthcare products and services. This combination builds on the strengths of both companies and the potential to focus on long-term growth, product pipeline and innovation."

The transaction is subject to certain closing conditions, including regulatory approvals, and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. The controlling stockholders of APP have executed a written consent providing the requisite stockholder approval for the merger. In connection with the proposed transaction, the Fresenius subsidiary that will issue the CVR will file a registration statement with the SEC, which will include an information statement describing the merger and related transactions that will be mailed to APP stockholders.

The terms of the transaction provide for the payment by APP of a termination fee in the event that APP terminates the transaction to accept a superior proposal. Goldman, Sachs & Co. and Lazard Freres & Co. LLC served as advisors to APP, Inc. Fried, Frank, Harris, Shriver & Jacobson LLP served as legal advisor to APP. Deutsche Bank advised Fresenius on this transaction. Skadden, Arps, Slate, Meagher & Flom LLP served as legal advisor to Fresenius.