Fresenius could pay an additional $960 million upon APP meeting particular financial targets.
Fresenius intends to acquire APP Pharmaceuticals in a transaction that could be worth $4.6 billion. APP will become part of the Fresenius Kabi division, facilitating entry into the U.S. market. The firm also reports that it will obtain a leading position in the U.S. injectable generics market.
Fresenius will initially pay $23 per share in cash, or $3.7 billion. The offer values APP at 29% fo its closing price on the last trading day, Thursday, July 3. APP’s stock reached $23.68 in early morning trading.
Under the terms of the agreement, Fresnius will pay another $970 million for a contingent value right if certain financial targets are achieved. If these milestones are achieved, investors will receive an additional $6 per share, payable in the second quarter of 2011. Fresenius will also assume APP’s outstanding debt of roughly $940 million, net of cash.
The controlling stockholders of APP have executed a written consent providing the requisite stockholder approval for the merger, according to the companies.
APP will have to pay a fee in the event that the firm terminates the transaction to accept a superior proposal.