Germany's Fresenius to buy 43 hospitals from Rhoen-Klinikum for $4.1 bn

FreseniusGerman health care company Fresenius SE today agreed to buy 43 hospitals from rival Rhoen-Klinikum, for €3.07 billion ($4.1 billion), creating the largest private-sector hospital operator in Europe.

The deal which has been approved by the board of both companies, comes a year after Fresenius withdrew its $4.09 bn bid for the whole of Rhoen-Klinikum. (See: Germany's Fresenius drops $4.09 bn bid for rival Rhoen-Klinikum)

In April 2012, Fresenius launched a €22.50 a share cash bid for Rhoen-Klinikum, but only about 84 per cent of Rhoen-Klinikum's stock was tendered to the offer. Fresenius offer was contingent on a minimum acceptance of 90 per cent of Rhoen's share capital.

Although Rhoen-Klinikum's founder and chairman, Eugen Muench, who owns 12.45 per cent of the company, had supported the deal, minority shareholders, hospital operators Asklepios Kliniken and Sana Kliniken, and pharmaceutical company B Braun Melsungen started to increase their stake in the company to around a combined 15 per cent in order to torpedo the deal.

B Braun, which fears that it would lose Rhoen as a client to Fresenius, sought regulatory approval this month to increase its stake in Rhoen-Klinikum to 25 per cent in order to thwart the deal once more.

The current deal, which does not require a shareholder vote, would make Fresenius unit Helios the largest private hospital operator in Europe, Fresenius said in a statement.

Fresenius is acquiring 43 hospitals with around 11,800 beds as well as 15 outpatient facilities.

On the basis of 2013 pro forma financials, the acquisition is expected to add sales of around €2 billion and an EBITDA of approximately €250 million.

Not included in the deal are Rhoen-Klinikum's hospitals in Bad Neustadt, Bad Berka, Frankfurt, as well as the university hospitals in Giessen and Marburg. The sale will leave Rhoen-Klinikum with 5,300 hospital beds, which will generate sales of about €1 billion annually.

Post completion, Helios would have 117 hospitals across Germany and sales of nearly €5.5 billion.

Fresenius said that the acquisition will enable Helios to significantly expand its hospital operations across the country and bring the majority of the German population within an hour's drive of a Helios hospital.

Helios and Rhön-Klinikum are also planning to enter into a agreement over Rhön-Klinikum's remaining hospitals. These hospitals will become part of a network offering innovative care models across Germany.

Ulf Mark Schneider, CEO of Fresenius, said, ''This compelling transaction provides a unique opportunity to create a nationwide hospital network and to establish Europe's largest private hospital operator. The clinics we are acquiring from Rhön-Klinikum are a perfect strategic and geographic fit with Helios' existing portfolio and will allow us to develop innovative approaches to health care.''

''With the support of the Supervisory Board, we have made a ground-breaking and at the same time extraordinarily sustainable decision. Through its critical mass, the 'new Rhön' is well positioned to deliver significant additional medical and economic growth,'' said Dr. Martin Siebert, CEO of Rhön-Klinikum.

Founded in 1912, Hamburg-based Fresenius is a diversified medical equipment company that provides products and services for dialysis, hospitals as well as inpatient and outpatient medical care.

With activities spanning about 100 countries on six continents, the company employs over 137,000 people. It also owns Fresenius Medical Care, the world's largest dialysis company.

Helios is the biggest providers of inpatient and outpatient care in Germany, while Rhön-Klinikum is the second-largest and Asklepios third.

Berlin-based Helios was acquired by Fresenius in 2005. It has over 60 hospitals and more than 18,500 beds, treating over 2 million patients annually.

Fresenius also owns a health-care services operation, Vamed, and the infusion-therapy and clinical- nutrition distributor Fresenius Kabi.