2. Acquisitions and divestitures

Acquisitions and divestitures

The Fresenius Group made acquisitions of € 260 million and € 3,853 million in 2009 and 2008, respectively. Of this amount, € 236 million were paid in cash and € 24 million were assumed obligations in 2009.

Fresenius Medical Care

In the year 2009, acquisition spending of Fresenius Medical Care in an amount of € 138 million related mainly to the purchase of dialysis clinics.

In the year 2008, acquisition spending of Fresenius Medical Care in an amount of € 220 million related mainly to the purchase of dialysis clinics and license agreements. In July 2008, Fresenius Medical Care entered into license and distribution agreements to market and distribute intravenous iron products. For further details on these license and distribution agreements, please see note 18, Goodwill and other intangible assets.

Fresenius Kabi

In the year 2009, Fresenius Kabi spent € 32 million on acquisitions. The acquisition of a Lactulose business division in Italy was the biggest individual project.

In the year 2008, Fresenius Kabi spent € 3,612 million which mainly referred to the acquisitions of APP Pharmaceuticals, Inc. (APP), United States, and Fresenius Kabi Oncology Ltd. (former: Dabur Pharma Ltd.), India.

Acquisition of APP Pharmaceuticals, Inc.

In July 2008, Fresenius Kabi has signed definitive agreements to acquire 100 % of the share capital of APP. APP is a leading manufacturer of intravenously administered generic drugs in North America.

Fresenius Kabi has completed the acquisition on September 10, 2008. The acquisition of APP has been accounted for applying the purchase method and has been first-time consolidated starting September 1, 2008. APP shareholders received a Cash Purchase Price of US$ 23.00 per share. Based on the Cash Purchase Price, the transaction values the fully diluted equity capital of APP at approximately US$ 3.7 billion. Furthermore, the shareholders received a registered and tradable Contingent Value Right. In addition, US$ 0.9 billion of net debt was assumed and refinanced.

The acquisition was financed with a mix of debt and equity by launching Mandatory Exchangeable Bonds, capital increase and entering into a syndicated credit agreement and into a bridge credit agreement. The latter was redeemed using proceeds of the issuance of new Senior Notes in January 2009 (see note 22, Senior Notes ).

The final purchase price allocation is as follows:

in million US$  
Net working capital and other assets / liabilities 227
Property, plant and equipment 109
In-process research and development 366
Identifiable intangible assets 542
Goodwill 3,664
Total 4,908

in million US$  
Net working capital and other assets / liabilities 227
Property, plant and equipment 109
In-process research and development 366
Identifiable intangible assets 542
Goodwill 3,664
Total 4,908

In comparison to the preliminary purchase price allocation, changes incurred in property, plant and equipment, goodwill as well as in net working capital and other assets / liabilities resulted from the finalization of a plan to close a manufacturing facility and to transfer its production operations to other plants.

The following financial information on a pro forma basis reflects the consolidated results of operations as if the acquisition of APP had been consummated at the beginning of 2008. The adjusted net income attributable to Fresenius SE includes corresponding pro forma adjustments mainly for interest expense on acquisition debt as well as income taxes. The pro forma financial information is not necessarily indicative of the results of operations as it would have been had the acquisition of APP been consummated at the beginning of the respective periods.

  2008
in million € as reported pro forma
1 Before special items relating to the APP acquisition (for details see note 3, Special items)
2 Under consideration of dilution effects which positively influence the earnings per share
Sales 12,336 12,641
Adjusted net income attributable to Fresenius SE 1 450 412
Net income attributable to Fresenius SE 270 232
Basic earnings per ordinary share in € 1.71 1.46
Fully diluted earnings per ordinary share in € 1.58 1.50 2
Basic earnings per preference share in € 1.72 1.47
Fully diluted earnings per preference share in € 1.59 1.51 2

  2008
in million € as reported pro forma
1 Before special items relating to the APP acquisition (for details see note 3, Special items)
2 Under consideration of dilution effects which positively influence the earnings per share
Sales 12,336 12,641
Adjusted net income attributable to Fresenius SE 1 450 412
Net income attributable to Fresenius SE 270 232
Basic earnings per ordinary share in € 1.71 1.46
Fully diluted earnings per ordinary share in € 1.58 1.50 2
Basic earnings per preference share in € 1.72 1.47
Fully diluted earnings per preference share in € 1.59 1.51 2

Acquisition of Fresenius Kabi Oncology Ltd. (former: Dabur Pharma Ltd.)

In April 2008, Fresenius Kabi has entered into agreements to acquire 73.3 % of the share capital of the Indian company Fresenius Kabi Oncology Ltd. (former: Dabur Pharma Ltd.) for a price of Indian rupee 76.50 per share in cash (total amount: € 139 million). In accordance with Indian regulations, Fresenius Kabi also announced a public offer to acquire up to a further 20 % shareholding for a price of Indian rupee 76.50 per share in cash. After the successful completion in the third quarter of 2008, the transaction was closed on August 11, 2008. Fresenius Kabi holds 90 % of the shares. The total cash purchase price of Fresenius Kabi Oncology Ltd. (former: Dabur Pharma Ltd.) was € 177 million.

Fresenius Helios

In 2009, Fresenius Helios spent € 79 million which mainly referred to the acquisitions of five acute care hospitals. Fresenius Helios entered into agreements to acquire these hospitals in December 2008 and closed the transactions in February 2009.

Fresenius Vamed

In 2009, Fresenius Vamed did not make any material acquisition.

In 2008, Fresenius Vamed spent € 35 million on acquisitions mainly related to the intercompany purchase of the hospital group Mediterra, Czechia, from Fresenius Helios and to the purchase of HERMED Technische Beratungs GmbH, Germany.

Corporate / Other

In 2009, in the segment Corporate / Other, € 9 million milestone payments were paid in conjunction with the acquisition of additional shares of Trion Pharma GmbH, Germany, in 2007.

In the first quarter of 2008, in the segment Corporate / Other additional shares of HELIOS Kliniken GmbH, Germany, were acquired for a purchase price of
€ 31 million.

Impacts on Fresenius Group’s consolidated financial statements resulting from acquisitions

In the fiscal year 2009, all acquisitions have been accounted for applying the purchase method and accordingly have been consolidated starting with the date of acquisition. Each single acquisition is not material. The excess of the total acquisition costs over the fair value of the net assets acquired was € 310 million and € 3,659 million in 2009 and 2008, respectively.

The purchase price allocations are not yet finalized for all acquisitions. Based on preliminary purchase price allocations, the recognized goodwill was € 229 million and the other intangible assets were € 81 million. Of this goodwill, € 125 million is attributable to the acquisitions of Fresenius Medical Care, € 43 million to Fresenius Kabi’s acquisitions and € 61 million to the acquisitions of Fresenius Helios.

The acquisitions completed in 2009 or included in the consolidated statements for the first time for a full year, contributed the following amounts to the development of sales and earnings:

  2009
in million € as
reported
before
special items
Sales 683 683
EBITDA 161 161
EBIT 125 125
Net interest - 163 - 163
Other financial result - 31 0
Net income attributable to Fresenius SE - 53 - 33

  2009
in million € as
reported
before
special items
Sales 683 683
EBITDA 161 161
EBIT 125 125
Net interest - 163 - 163
Other financial result - 31 0
Net income attributable to Fresenius SE - 53 - 33

The acquisitions increased the total assets of the Fresenius Group by € 337 million.

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