Biotech Values

[DewDiligence]

Fresenius Acquires APPX for $23/sh Plus Considerations

[The nominal premium to the market price is “only” 29%. However, APPX shareholders could receive an additional $6/sh in consideration payable in 2011 if certain milestones are met. Fresenius, based in Germany, is the world leader in dialysis centers and owns a smallish drug/nutrition business. APPX focuses and injected generic drugs used by hospitals.]

http://biz.yahoo.com/bw/080707/20080706005044.html

›Monday July 7, 1:00 am ET

Combination Expands Leadership Position in Injectable Hospital Based Markets

SCHAUMBURG, Ill. & BAD HOMBURG v.d.H., Germany--(BUSINESS WIRE)--APP Pharmaceuticals, Inc. (Nasdaq: APPX ), a leading provider of hospital-based injectable pharmaceutical products, and Fresenius SE (XETRA:FRE - News), a global health care group with approximately $18 billion of sales in products and services for hospital, dialysis and in home medical care, today announced that they have entered into a definitive merger agreement pursuant to which Fresenius will acquire APP.

Under the terms of the agreement, Fresenius will acquire the outstanding common stock of APP for $23.00 in cash per share (the “Cash Purchase Price”) 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 the Company 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% and 63%, respectively, over the Company’s closing stock price on July 3, 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.

“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 Frères & 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.

Conference Call Information

On Monday, July 7, 2008, APP will host a conference call beginning at 10:30 a.m. EDT (7:30 a.m. PDT) to review the details of the transaction. The conference call will be available through a live audio webcast at www.APPpharma.com and www.earnings.com where it will be archived and accessible for one month.

About Fresenius

Fresenius is a health care group with international operations, providing products and services for dialysis, hospital and outpatient medical care. In 2007, group sales were approx. € 11.4 billion. On March 31, 2008 the Fresenius Group had 116,203 employees worldwide.

About Fresenius Kabi

Fresenius Kabi is the leader in infusion therapy and clinical nutrition in Europe and in its most important countries of Latin America and Asia Pacific. Fresenius Kabi’s core product range includes infusion solutions for fluid substitution, blood volume expansion and parenteral nutrition, as well as products for enteral nutrition. Furthermore, the company provides concepts for ambulatory health care and is focused on managing and providing home therapies. With its philosophy “Caring for life” and a comprehensive product portfolio, the company aims at improving the quality of life of patients all over the world. On March 31, 2008 the company had 17,816 employees. In 2007, Fresenius Kabi achieved sales of € 2,030 million and an operating profit of € 332 million. Fresenius Kabi AG is a 100 % subsidiary of the health care group Fresenius SE.

About APP Pharmaceuticals, Inc.

APP is a fully-integrated pharmaceutical company that develops, manufactures and markets injectable pharmaceutical products with a primary focus on the oncology, anti-infective, anesthetic/analgesic and critical care markets. The Company offers one of the most comprehensive product portfolios used in hospitals, long-term care facilities, alternate care sites and clinics within North America and manufactures a comprehensive range of dosage formulations.‹



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