German health care group Fresenius will buy Quirónsalud, Spain’s largest private hospital operator, for €5.76 billion, or $6.42 billion, in a major expansion in Europe.
The German company, which is Europe’s largest publicly-traded health care group, said late on Monday it had agreed to buy the Spanish hospital chain from private equity firm CVC and the Spanish company’s own management.
Fresenius, based in Bad Homburg, a suburb of Frankfurt, is through its listed subsidiary, Fresenius Medical Care, the world’s largest provider of dialysis services. The group, which owns 31 percent of Fresenius Medical Care, makes 46 percent of its revenues in North America, but its hospital unit Fresenius Helios was entirely focused on Germany.
“Given the expected meaningful accretion to group sales and earnings, Fresenius will publish new mid-term targets as part of its full-year 2016 reporting.”
Fresenius Helios, which runs 112 hospitals with 70,000 employees in Germany, will now expand outside its home market with the Quirónsalud takeover, acquiring 43 hospitals, 39 outpatient centers and 300 centers where employees are checked to prevent job-related diseases and injuries. Quirónsalud is expected to generate an annual revenue of €2.5 billion and operating profit of €460 million to €480 million this year.
The Spanish deal marks another large takeover of hospitals since Fresenius Group’s €3.1-billion acquisition of 41 German medical centers in 2014 and is the first one since Stephan Sturm became chief executive on July 1. The former Credit Suisse investment banker was Fresenius’ finance head the past eleven and a half years, during which the group became Germany’s largest hospital operator.
Shares of Fresenius surged in Frankfurt by nearly 6 percent after the deal was announced, and were trading up 4.9 percent at €69.38 on Tuesday afternoon.
In a statement, Fresenius said it would fund the deal mostly by selling around €5.36 billion in new debt, which will increase the company’s debt-to-operating profit level temporarily.
Fresenius will pay the remainder of the acquisition sum by issuing 6.1 million shares valued at €400 million to Quirónsalud’s chief executive, Víctor Madera, who will continue to lead the Spanish company. Mr. Madera is a founder of one of Quirónsalud predecessors and holds shares in the Spanish company.
“Given the expected meaningful accretion to group sales and earnings, Fresenius will publish new mid-term targets as part of its full-year 2016 reporting,” Fresenius said.