Fresenius gets some APP medicine for $3.7 billion

Filed under: Deals

It's been a good year for APP Pharmaceuticals Inc. (NASDAQ: APPX), as the stock price has climbed from $10 to $23.50. Today there was some extra good news: Fresenius SE, the largest intravenous drug developer in Europe, has agreed to shell out $3.7 billion for the company (there will also be $940 million in assumed debt). In today's trading, APP's stock is up 32%.

It's a great day for Soon-Shiong who founded APP in 1996 and still owns a whopping 80% of the company.

APP is a leader in developing generic injectable pharma products, such as for acute care and specialty clinic applications. In the company's latest quarterly report, revenues increased 6% to $148.1 million and adjustable net income was $22 million, or $0.14 per share. What's more, the company received final FDA approval on four products: Polymixin B Sulfate, Caffeine Citrate Oral Solution and Irinotecan Hydrochloride. There was also a product launch for Cefepime Hydrochloride.

However, investors of Fresenius aren't so happy. The company's shares dropped about 10% in Germany. Essentially, there are concerns about valuation as well as the ability to finance the deal, which will involve mostly debt. Yet, if Fresenius wants to enter the U.S. market, it really has no choice but to pay a premium.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates MergerBook.com.

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