Fresenius SE & Co.'s minority-owned kidney dialysis business agreed Monday to acquire NxStage Medical Inc. for about $2 billion as part of the German health-care provider's broader push into the U.S.
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The NxStage deal comes less than five months after Fresenius SE, which owns 31% of Fresenius Medical Care, agreed to acquire U.S. generics drug manufacturer Akorn Inc. for $4.3 billion. That deal aimed to bolster and diversify its Fresenius Kabi unit's focus on sterile injectable medicines to treat critically and chronically ill patients.
Fresenius Medical Care AG, which describes itself as the world largest provider of dialysis products and services for the treatment of kidney diseases, is acquiring NxStage as hospitals face pressure to lower costs without undermining patient care. With the acquisition of NxStage, Fresenius Medical gains access to the Boston, Massachusetts-based company's portable dialysis machines, for use in a patient's home as well as in hospitals, and dialysis centers that both health care professionals and trained lay users can operate.
Fresenius Medical says it treats 315,305 patients globally through its networks of 3,690 dialysis clinics. The Bad Homburg, Germany-based company is also a big provider of dialysis machines. For Fresenius Medical, development of home therapies is a key research and development focus. It is betting that rising health-care costs and limited availability of trained personnel will drive demand for NxStage's machines.
"Home dialysis is a critical component of renal care, and this acquisition would help us accelerate growth and innovation" in this area, said Bill Valle, head of Fresenius Medical's North American operations. Fresenius Medical is acquiring NxStage for $30 a share, about a 30% premium to the company's closing price in New York on Friday.
For NxStage, the deals give its access to the resources of a larger company. In 2016, Fresenius Medical generated revenue of $17.9 billion, compared with $366 million for NxStage.
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The NxStage deal underscores Fresenius SE's overall strategy of targeting the U.S. as a source of revenue growth and cost savings through acquisitions that complement its operations.
NxStage, like Fresenius Medical, has its U.S. headquarters in Massachusetts.
Fresenius Medical estimates annualized net cost savings through the deal of up to $100 million before tax over three to five years. In the Fresenius Kabi-Akorn deal, the German company estimated integration of the two businesses would generate about $100 million in pretax cost savings a year.
-- William Wilkes contributed to this article.
Write to Ben Dummett at email@example.com
(END) Dow Jones Newswires
August 07, 2017 07:50 ET (11:50 GMT)