DaVita Inc. agreed to buy Gambro's U.S. clinics for $3.1 billion in cash to become the kidney treatment leader in the world's biggest healthcare market.
DaVita, based in El Segundo, will double the number of people using its services to 96,000 patients at more than 1,200 sites in the U.S. The Gambro unit had about $1.8 billion in 2003 sales, the Swedish company said.
Gambro's operations will allow DaVita to overtake Fresenius Medical Care of Germany, whose 84,600 U.S. customers make it the largest provider of dialysis, which filters impurities from the blood. Gambro will focus on devices for blood- and cell-based therapies, including dialysis.
"It's certainly a good price and a good deal for both sides," said Ludger Mues, a medical-technology analyst at Sal. Oppenheim. "DaVita believes it can make the business more profitable and Gambro can concentrate on its devices."
DaVita shares climbed to a 52-week high of $37.77 before closing at $37.72, up 90 cents, on the New York Stock Exchange. DaVita's stock has gained 45% this year.
DaVita plans to finance the acquisition through a new financing arrangement and by issuing notes, it said.
This year, Gambro, DaVita, Fresenius Medical and Renal Care Group Inc. received subpoenas from U.S. prosecutors in an industrywide probe of practices involved in testing kidney patients' hormone levels. Last week, Gambro said it had reached a final settlement in a different U.S. investigation.
Gambro, which began mass production of single-use artificial kidneys and dialysis machines in 1967, agreed to supply DaVita with renal products for at least 10 years and jointly develop dialysis products.
"It clearly makes sense for Gambro," Mues said. "They are the preferred product partner for DaVita for the next 10 years. This is Gambro's most profitable business and they get really a good price for the U.S. business."
DaVita and Gambro expect to complete the transaction in the first half of 2005. The acquisition will add about 43,200 patients in 565 dialysis centers to DaVita's operations. After completion of the deal, DaVita will have combined sales of about $4.4 billion.