By Ludwig Burger
FRANKFURT (Reuters) - Germany's Fresenius SE plans to take over Rhoen-Klinikum AG for 3.1 billion euros ($4.1 billion), making the healthcare conglomerate by far the largest private-sector operator of German hospitals.
Fresenius said on Thursday Rhoen-Klinikum's founder and Chairman Eugen Muench, who controls 12.45 percent of the group's shares, supports the transaction, but Rhoen said in a separate statement its management would first have to assess the offer before taking a view on its merits.
Fresenius, which controls dialysis specialist Fresenius Medical Care, is offering 22.50 euros per share in cash, a premium of 52 percent to Rhoen-Klinikum's closing price on Wednesday and 53 percent above the average price over the last three months.
Rhoen Klinikum shares jumped 50 percent to 22.12 euros by 4:32 a.m. EDT. Fresenius shares dropped 4.8 percent.
"It's the surprise at the huge step that Fresenius has taken in combination with the prospect of a capital increase that is weighing on the shares. But there is a good amount of synergies to be realized and (existing Fresenius hospital unit) Helios is familiar with making takeovers," said Ulrich Huwald, an analyst at M.M. Warburg.
German private-sector operators, which include unlisted Asklepios and Sana Kliniken, have been gradually snapping up underfunded public hospitals, often sold by municipalities as a last resort in a trend often met with harsh criticism by the general public.
The proposed Rhoen takeover represents a rare growth opportunity for Fresenius, with German hospital privatization slowed by millions of euros of investment needs at each potential target and the prospect of laborious restructuring efforts in the wake of any takeover.
Fresenius' offer is contingent on a minimum acceptance of 90 percent of Rhoen's share capital at the end of the offer period.
Rhoen is one of Germany's largest private hospital operators, with 2011 sales of 2.6 billion euros, running 53 hospitals and 39 health care centers.
That compares with 2.67 billion in sales and 65 clinics of the Helios subsidiary.
"By extending our healthcare network across the entire country, we will bring some 75 percent of Germany's people within an hour's drive of one of our hospitals," Fresenius Chief Executive Ulf Schneider said.
Combining procurement, services and administration of the two businesses would widen the new hospital group's core earnings margin by 1-2 percentage points, Fresenius added.
It plans to finance the acquisition through a syndicated loan, a bond issue and equity instruments worth up to 1 billion euros, either in the form of a rights issue or a sale of convertible bonds, a spokesman said.
The Else Kroener-Fresenius-Foundation, which controls Fresenius, would participate in the equity financing with a high double-digit million euro amount, the company added.
It also said Deutsche Bank, J.P. Morgan, Société Générale, Credit Suisse and UniCredit have made financing commitments.
Fresenius and its unit Fresenius Medical Care also published first-quarter results ahead of schedule on Thursday.
($1 = 0.7585 euros)