German dialysis services provider Fresenius Medical Care (FMC) has agreed to buy NxStage, a U.S. maker of devices for use in home dialysis, for around $2 billion in cash, it said on Monday.
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, will add its System One home dialysis machine, sold primarily to FMC and rival DaVita in the United States, to FMC’s portfolio of products.
Analysts at Bernstein said the deal came as a surprise but made good strategic sense in the medium term.
“Currently HHD (home dialysis) is a niche treatment as under current reimbursement it is an expensive modality. However, with reimbursement increasingly moving towards an integrated care model… the flexibility of being able to treat patients at home is likely to be more attractive,” they said.
Boston-based NxStage made $366 in revenue in 2016 and narrowed its net loss to $5 million from $15 million a year earlier. It has 3,400 employees.
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Analysts said the deal valued NxStage at around 15 times expected core profit, roughly on par with comparable medical technology deals.
FMC said it expected the acquisition to start adding to net income within three years from closing, expected in 2018.
It sees annual pretax cost-savings potential of $80 to $100 million over three to five years, and integration costs of about $150 million in the next three years.
It plans to finance the acquisition with cash and debt.
Shares in FMC slipped 1.6 percent to 77.76 euros in midmorning trade, making them the biggest decliners on the German blue-chip DAX index.