Counting itself one of the luckiest girls in town this week, APP Pharmaceuticals got a $3.7 billion engagement ring from Fresenius SE, the German health care group best known for its worldwide network of dialysis clinics.
Fresenius is acquiring APP Pharmaceuticals and its stable of generic injectable drugs to expand its Fresenius Kabi unit, which makes infusion therapies such as intravenous nutrition and blood volume replacement products. The acquisition gets Fresenius Kabi into the North American market, where APP has operated exclusively, and gives APP the ability to go global. Fresenius has agreed to the nearly $4 billion cash payment, as well as additional payments if financial targets are met. It will also assume nearly a billion dollars in APP’s debt.
APP Pharmaceuticals makes generic injectable drugs like the blood thinner heparin, as well as intravenously administered pain and cancer drugs. It became the US’s largest supplier of heparin in 2008 after tainted batches of the drug imported from China (and sold by Baxter International) were withdrawn from the market.
The deal is yet another sign of the growing interest in generics, particularly in the US market, where two-thirds of all prescriptions are filled by a generic equivalent. It follows newspaper reports last month indicating the intentions of Chinese drugmakers to enter the US, as well as Daiichi Sankyo’s agreement to acquire a controlling interest in Indian generic maker Ranbaxy, which also has a significant North American presence.
Incidentally, if APP is the luckiest girl in town, then its founder and former CEO Patrick Soon-Shiong is certainly the luckiest boy. Soon-Shiong, already named one of Forbes’ richest Americans last year, owns more than 80% of the firm, which was spun off from Abraxis BioScience in 2007. (Soon-Shiong owns a controlling stake in that company as well.) And he will get a payout of up to $3.8 billion, according to the LA Times, if all goes according to plan.
Comments
APP Stockholder Says:
July 8th, 2008 at 11:08 am
I read that all shareholders will get a payment of $23 a share for this deal. Does that mean that I lost all my shares?
kkelly Says:
July 8th, 2008 at 11:43 am
It looks as if the deal is a cash payout. That means you will receive $23 multiplied by however many shares you currently hold in APP. From the news I have seen, it doesn’t look like current shareholders will get Fresenius shares in exchange.
Apparently the $23 per share is a 29% premium over the stock’s closing price on Friday.
Does this answer your question?
APP Stockholder Says:
July 8th, 2008 at 12:25 pm
Kristi:
Thanks for the info. The two previous times, when APP was separate and then combined with Abraixis, we were given shares. When they separated the companies back about a year and a half ago, the shares we owned were split between Abraxix, and APP. But I guess the difference then was both compaines were owned by the same person.
Was hoping we would get some shares of the new company.
Thanks again..
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