Fresenius Helios Acquires 43 Hospitals from Rhoen-Klinikum

By Shane Strowmatt

German healthcare company Fresenius SE & Co. KGaA (FRE.XE) said Friday its Helios unit acquired several hospitals from Rhoen-Klinikum AG (RHK.XE) in a deal that will make Helios the largest private hospital operator in Europe.

Fresenius will pay 3.07 billion euros ($4.07 billion) for the assets and expects the acquisition to generate yearly sales of approximately EUR2 billion and earnings before interest, tax, depreciation and amortization, or Ebitda, of around EUR250 million.

The deal comes after Fresenius was forced to abandon an attempt to take over Rhoen-Klinikum entirely last year as the privately held hospital group Asklepios snapped up shares in Rhoen--effectively stifling the deal. In June, Rhoen-Klinikum shareholders voted in favor of changing the company's strict voting-threshold statutes, making the company more vulnerable to takeovers.

The supervisory boards of both companies have agreed to the deal and approval from Rhoen's shareholders isn't necessary, Rhoen said.

Fresenius expects the 43 new hospitals--including 11,800 beds and 15 outpatient facilities--to produce synergies resulting in a potential 1% to 2% increase in the Ebitda margin at Helios. The transaction will be entirely financed using debt and the company expects one-time costs associated with the transaction to total about EUR80 million before tax.

As part of the deal, Helios and Rhoen-Klinikum are planning to enter into a cooperation agreement covering Rhoen's remaining hospitals. The cooperation is valued at around EUR40 million, of which Fresenius will contribute about EUR30 million and Rhoen EUR10 million, Rhoen-Klinikum said.

Following the transaction, Rhoen plans to specialize with its remaining hospitals on scientific and university medical programs.

The deal is still subject to antitrust approval and Fresenius expects the deal to be largely closed by the end of the year.

Write to Shane Strowmatt at [e-mail]

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