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Rhoen Klinikum Management Will Back Fresenius Takeover Offer

Rhoen Klinikum AG (RHK)’s management said it will back the 3.1 billion-euro ($3.9 billion) takeover offer from Fresenius SE (FRE), contingent on an agreement to maintain certain jobs and locations at the German hospital operator.

Rhoen Klinikum executives will remain in leadership positions after the deal is complete, Chief Executive Officer Wolfgang Pfoehler said today in a letter to employees of the Bad Neustadt an der Saale, Germany-based company. The management board entered into an agreement with Fresenius today, the company said in a statement.

Rhoen Klinikum’s supervisory board is scheduled to make a recommendation on the offer on May 28, the company said. Fresenius, the German operator of the Helios hospital chain, offered on April 26 to buy Rhoen Klinikum for 22.50 euros a share, 52 percent more than the closing price a day before. The deal would build Fresenius’s hospital unit to 6 billion euros in annual sales, about 8 percent of the German market, and allow “substantial” cost savings, Fresenius has said.

“This is it,” Birgit Kulhoff, a Zurich-based fund manager at Rahn & Bodmer Co., said in a telephone interview. Management approval means the deal will probably go through, she said. “The deal makes a lot of sense in terms of cost savings, in terms of simple volume you can achieve.”

Photographer: Ralph Orlowski/Bloomberg

The headquarters of Fresenius SE stand in Bad Homburg. Close

The headquarters of Fresenius SE stand in Bad Homburg.

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Photographer: Ralph Orlowski/Bloomberg

The headquarters of Fresenius SE stand in Bad Homburg.

Rhoen Klinikum investors have a June 27 deadline to tender their shares. Germany’s financial regulator approved the offer on May 18, Bad Homburg, Germany-based Fresenius said in a document posted on its website at the time.

Open Question

“Despite this positive recommendation of the management board, it remains open whether the Fresenius offer will be successful,” Pfoehler said in the letter. “I ask you for your patience.”

Fresenius’s offer is contingent on receiving at least 90 percent of Rhoen Klinikum shares in the offer, and on winning approval from antitrust regulators. Rhoen Klinikum Chairman Eugen Muench supports the sale, and he and his wife will tender their 12 percent stake, Fresenius said last month when it announced the offer.

Rhoen Klinikum shares rose 0.6 percent to 21.97 euros in Frankfurt.

Another condition of Rhoen Klinikum’s management approval was keeping the company’s Bad Neustadt offices, according to Pfoehler’s letter.

Rhoen Klinikum is being advised by Morgan Stanley (MS) and Berenberg Bank. Fresenius is getting advice from Deutsche Bank, and the company’s legal adviser is Hengeler Mueller.

Fresenius has said it hopes to close the purchase in the third quarter.

To contact the reporter on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Kristen Hallam at khallam@bloomberg.net

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