The world’s largest provider of dialysis products and services, Fresenius Medical Care (NYSE: FMS), has announced an agreement to acquire U.S. medical technology company, NxStage Medical, Inc. (NASDAQ: NXTM).
The German group will offer $30 per share, a 22 percent premium to NxStage's 90-day moving average share price, to acquire all of NxStage's outstanding shares. The deal, which has been approved by NxStage's board and valued at approximately $2 billion, will add its System One home dialysis machine, sold primarily to FMC and rival DaVita (NYSE: DVA) in the United States, to FMC's portfolio of products.
NxStage, which is based in Boston, MA. (FMS is also based in Boston), was founded in 1999 and has approximately 3,400 employees. The company develops, produces, and markets a series of medical devices to be used in home dialysis and the critical care setting. Last year, it brought in $336 million in revenue.
This acquisition enables Fresenius Medical Care to further leverage its manufacturing, supply chain and marketing competencies across the dialysis products, services and care coordination businesses in a less labour and capital-intensive care setting.
Rice Powell, Chairman and CEO of Fresenius Medical Care, said, "The acquisition supports our 2020 strategic initiative of driving growth in the core business with innovation, better clinical outcomes through Care Coordination and improving the patient experience. Combining our two companies would strengthen and diversify our business in the U.S. and help meet the evolving needs of our patients."
The transaction would be cash and debt financed. An initial net cost synergies potential of approximately $80 to $100 million before tax over three to five years is expected. Integration cost of around USD 150 million in the first three years from announcement, are assumed. Fresenius Medical Care expects the acquisition to be accretive to net income and EPS within three years from closing.