Fresenius to Acquire Dialysis Rival Renal Care Group for $3.5 Billion

Fresenius Medical Care said Wednesday that it would acquire Renal Care Group Inc. in a $3.5-billion deal that would make it one of the world’s biggest dialysis-care companies.

Fresenius, based in Bad Homburg, Germany, said it would pay $48 a share for Nashville-based Renal Care. The deal is subject to regulatory approval in the U.S. and Europe.

“This acquisition solidifies Fresenius Medical Care’s position as the leader in dialysis services in the U.S.,” Chief Executive Ben Lipps said. “With its service network, Renal Care Group provides an excellent strategic and geographic fit to Fresenius Medical Care’s operations in the world’s largest dialysis market.”

But analysts worried that Fresenius might be overpaying, and shares in the company fell 3.5% on the Frankfurt exchange. Shares of Renal Care, however, rose $6.40, or 16%, to $45.70 on the New York Stock Exchange.

Fresenius said it hoped to close the deal by the second half of 2005, adding that it would create a company with estimated annual revenue of $7.5 billion.

Fresenius is one of the biggest dialysis providers, treating nearly 126,000 patients at more than 1,630 clinics worldwide. It also provides outpatient service in 1,200 clinics and operates a joint venture for renal care with Kaiser Permanente, the Oakland-based health maintenance organization.

The deal would also let Fresenius increase its share of the U.S. dialysis service market to about 35% from 27%, Lipps said.

Currently the largest U.S. provider of kidney dialysis, Fresenius would have moved to second after the recent $3.1-billion deal between El Segundo-based DaVita Inc. and Gambro of Sweden. But with the Renal Care acquisition, Fresenius stands to maintain the No. 1 spot, said Howard Bilow, executive vice president of Danvers, Mass.-based American Renal Associates Inc., the sixth-largest dialysis provider in the United States.

“It’s a major step in the industry, and it’s really too early to understand the implications,” Bilow said. “There’s been consolidation of the industry for some time. What this does is step it up a notch.”

Renal Care offers dialysis and other nephrological care to more than 30,400 patients at 425 outpatient centers in 34 states. It also offers services to more than 200 hospitals. It had 2004 revenue of $1.35 billion.