Heparin -another chapter in the tale APP taken over by Fresenius - Patrick Soon Shong trousers US$3 Billion
German medical group Fresenius (FREG_p.DE: Quote) the biggest worldwide provider of dialysis services have bid a remarkable US$3.7 Bn. for APP Pharmaceuticals (APPX.O: Quote, ) who have, since problems with Chinese supplies of heparin pre cursor, become the dominant US supplier of heparin for dialysis , which hit competitor Baxter International Inc (BAX.N: Quote)
The high price saw Fresenius stock declining as they intend to finance part part of the deal through a capital increase. The deal will not only help Fresenius control costs (heparin from APPX has more than doubled in price) but provide an edge on competitor , dialysis services group DaVita Inc. (DVA.N: Quote, )
Fresenius will pay a 29% premium to the market price on Monday of US$23 per share and a possible US $6 a share in the second quarter of 2011 if APP beats a core profit target. Fresenius will also take on APP's net debt of about $940 million. It expects to close the deal at the end of 2008 or start of 2009 after regulatory approval when AP will become part of the Fresenius ' Kabi unit, its infusion drug therapy and nutrition division.
"With the APP platform, Fresenius Kabi will be able to market its product range in the U.S. Fresenius Kabi's international marketing and sales network will allow us to sell APP's products globally," Fresenius Chief Executive Ulf Schneider said.
Fresenius plans to finance the purchase with a mix of debt and equity aimed at minimizing the impact on Fresenius SE's credit ratings, with the largest portion through debt.
Colourful and controversial Patrick Soon-Shiong, APP founder and holder of over 80% of the APP outstanding stock, had given his written consent and a voting agreement and will pick up US$3 Bn. see Saturday, May 17, 2008 see Heparin - APP doubles prices, triples production - the fascinating life of Dr Soon-Shiong and cures for cancer and diabetes
We said at the time "Keep an eye open for more interesting information about this very interesting man and his very interesting career." .. which probably explains why a lot of interest has been shown in the last 2 days in the above post by folks at JP Morgan and Lehman Bros.... amomgst others.
Well maybe Baxter International just got unlucky with their suppliers of heparin from China enabling APP to snuck in, take over the dialysis market, double prices ... Patrick must have had good contacts in China to ensure supplies were not contaminated.
UPDATE WED 4.45 BST Here is soemthing very interesting about this very intersting company run by the very intersting Dr Patrick Soon Shiong. Footnoted.org notes an 8K SEC filing at around 2-30 on July 2nd ...there was Footnoted noted ..."sudden uptick in the company’s stock on Wednesday afternoon, someone seems to have picked up on the filing, or at least used it as a convenient excuse to buy."
"But it’s not just the stock that bounced. A short time ago, I spoke with Ryan Dietrick, a senior technical strategist at Schaeffer’s Research who said the options activity late last week looked unusual, given that normal open interest for APPX options had been “very light”. But on Thursday, someone made a pretty bold bet and bought 540 August call options @ 17.50 a share, which Dietrick says likely went for $1.30 to $1.40. Right now, those options are going for $6.30 a share, which makes whomever bought those options on Thursday either very smart or unusually lucky."
A Commentator posts ...."Hmmm, looks suspicious. I wonder if someone got the call first…"