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Fresenius misses acceptance hurdle in Rhoen deal
FRANKFURT (Reuters) - Germany's Fresenius (FREG.DE) failed to win the minimum acceptance among Rhoen-Klinikum AG (RHKG.DE) shareholders for its takeover offer, suffering a defeat in its bid to create a nationwide network of private hospitals.
The healthcare conglomerate said late on Friday that 84.3 percent of the Rhoen shares had been tendered, short of the acceptance threshold of more than 90 percent.
"The second completion condition for the acquisition is therefore not fulfilled," it said.
Fresenius unveiled a plan in April to buy Rhoen for 3.1 billion euros ($3.9 billion), setting an unusually high acceptance hurdle of 90 percent among Rhoen shareholders, which reflects the percentage required by Rhoen's bylaws for capital changes.
The 22.50 euro per share offer - a premium of more than 50 percent above Rhoen's share price before the approach was made public - expired on Wednesday midnight, but earlier that day a potential interloper had dimmed Fresenius' prospects.
Unlisted Asklepios, controlled by founder Bernard gr. Broermann, weighed in with the purchase of a 5.01 percent stake in Rhoen, saying it wanted to retain its options "for shaping the situation.
Fresenius Chief Executive Ulf Schneider had told Reuters he was prepared to walk away from the offer should the current terms not be accepted.
The 90 percent threshold had been regarded as a tall order even without anyone seeking to thwart the deal as some retail investors tend to ignore even attractive offers.
The new entity would have dwarfed Asklepios and smaller unlisted rival Sana, a possible motive for Asklepios to throw a spanner in the works.
Asklepios' maneuver has also proved a headache for investors such as John Paulson and Swedish pension firm Alecta, which bought Rhoen shares on the open market for slightly below the offer price aiming to later sell them on to Fresenius.
FRESENIUS BLAMES ASKLEPSIOS
"The substantial trading volume on the final day of the acceptance period, triggered by the announcement of Asklepios Kliniken GmbH regarding an equity stake in RHÖN-KLINIKUM AG, has interfered with the acceptance and settlement of the tender offer," Fresenius said. in its statement on Friday.
"We very much regret that the proposed transaction was blocked, without providing a constructive alternative," CEO Schneider was quoted in the Fresenius statement.
Several people familiar with the matter have said that the four largest German private hospital operators, including Fresenius' Helios unit, had been in talks about various tie-up options before Fresenius CEO Schneider in April struck a deal with Rhoen founder Eugen Muench, who controls 12.45 percent.
The quartet is now widely expected to resume these discussions.
"We remain convinced of the merits of combining Rhoen-Klinikum with Helios, and will assess our options in the coming days," Schneider said.
A spokesman for Fresenius told Reuters the goal was still the merger of the two companies. "There are no concrete plans right now but we are examining various possibilities," he added.
Fresenius has said bulging up would help its hospitals to cut costs cuts and boost revenues for instance through closer cooperation between specialist and more general clinics, who seamlessly handle patients between them.
Private operators have grown by snatching up underfunded hospitals from debt-laden German municipalities, but that has been hobbled by political opposition to privatization.
Since healthcare budget restraints are keeping Helios, Rhoen and their peers from setting up new greenfield hospitals, their only remaining growth option had been to look for mergers among themselves.
(Reporting Ludwig Burger and Marilyn Gerlach; Additional Reporting by Andreas Kroener; editing by M.D. Golan)
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