Rhoen Klinikum AG (RHK)’s management plans to back a 3.1 billion euro ($3.9 billion) sale of the German hospital operator to Fresenius SE, said people with knowledge of the matter.
Rhoen Klinikum may announce its support for the bid by the end of this month, said the people, who declined to be identified because the talks are private. The company doesn’t anticipate a counteroffer or attempt to block the takeover by a competitor, two of the people said. Rhoen Klinikum’s board has yet to vote and officially approve the deal, the people 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 company’s closing price the day before the offer was announced. The deal would build Fresenius’s hospital unit to 6 billion euros in annual revenue, about 8 percent of the German market, and allow “substantial” cost savings, Fresenius has said.
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.
Joachim Weith, a Fresenius spokesman, said the company’s bid is a good offer for all stakeholders and declined to comment further. A spokesman for Rhoen Klinikum declined to comment.
Fresenius and Rhoen Klinikum executives have been holding discussions this month about the offer and management board members are negotiating payouts as part of a sale, according to the people. Rhoen Klinikum’s supervisory board is also likely to support the offer, they said.
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 Chief Financial Officer Erik Hamann said at the time that the bid surprised company executives, and the board will review the proposal.
Muench founded Rhoen Klinikum, based in Bad Neustadt an der Saale, Germany, in 1973. The company helped begin a push to save money in the industry by buying public hospitals and consolidating administrative and other functions.
Fresenius completed a 1.01 billion-euro capital increase on May 11 to help finance the deal, and has said additional funding will come from a syndicated loan, a bond issue and equity instruments. The company said it has financing commitments from Deutsche Bank AG, JPMorgan Chase & Co., Societe Generale SA, Credit Suisse Group AG and UniCredit SpA. (UCG)
Rhoen Klinikum is being advised by Morgan Stanley and Berenberg Bank. Fresenius is getting advice from Deutsche Bank and the company’s legal adviser is Hengeler Mueller.
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’s articles of incorporation require 90 percent for a deal to go through, Fresenius said. The company may need to sell individual hospitals in regions where there is overlap to address antitrust concerns, Weith has said.
Fresenius has said it hopes to close the purchase in the third quarter.