UPDATE 2-B. Braun to raise stake in Rhoen to fend off sale

Tue Sep 3, 2013 8:19am EDT

Related Topics

* B. Braun says to secure "minority" position

* Family behind B. Braun last year bought 5 pct stake

* B. Braun helped fend off Rhoen suitor Fresenius last year

* Rhoen shares gain 2.1 pct (Adds background on B. Braun's motives, analyst quote)

By Ludwig Burger

FRANKFURT, Sept 3 (Reuters) - Rhoen-Klinikum shareholder B. Braun is aiming to raise its stake in the German hospital operator to 25 percent in an attempt to block a takeover of Rhoen by rival healthcare group Fresenius.

B. Braun, a rival of Fresenius in the hospital equipment market, bought a 5 percent stake in Rhoen last year, thwarting Fresenius's ambition to create the biggest private German hospital operator.

B. Braun, and Germany's second-biggest hospitals operator by sales, Asklepios, which also built up a stake in Rhoen last year, feared the merger would damage the hospitals and supplies market.

The B. Braun group said in a statement on Tuesday it "remains committed to sustainably secure the minority shareholding position in Rhoen-Klinikum".

"B. Braun welcomes a broad spectrum of hospital chains, as well as a competitive environment in the healthcare market," it said, declining to comment further.

If its gets antitrust approval it will be allowed to raise its stake to 25 percent or more, it added.

Shares in Rhoen rose 2.1 percent by 1000 GMT to be the top gainer on Germany's midcap index MDAX, which was down 0.3 percent.

B. Braun, owned by the family of Chairman Ludwig Georg Braun, competes with Fresenius in hospital equipment, such as intravenous and tube feeding supplies. It was concerned it would lose Rhoen as a major client should Fresenius take it over, sources have said.

Asklepios opposed the Rhoen-Fresenius deal because it feared that a dominant player would be able trump rivals when public-sector hospitals were put up for auction.

Private operators have grown by taking over underfunded hospitals from debt-laden German municipalities and looking to run them more efficiently.

Rhoen's bylaws required Fresenius to win 90 percent shareholder approval for its bid. The purchase of a stake of less than 10 percent in Rhoen by Asklepios was enough to prevent Fresenius from clearing that hurdle.

"It looks like the shareholders in the company will block each other in the long term," said NordLB analyst Holger Fechner.

Rhoen Chairman Eugen Muench has continued to campaign for the merger with Fresenius. He and his detractors have engaged in a legal tussle over the matter.

Muench in July filed a legal complaint with criminal prosecutors against Asklepios owner Bernard Broermann, accusing him of market manipulation and attempted coercion.

At Rhoen's annual shareholder meeting in June, Muench dismissed B. Braun's votes as invalid, prompting B. Braun, as well as Asklepios, to cry foul and fight the decision in court.

At the AGM, shareholders voted in favour of cutting the acceptance threshold to the usual 75 percent from 90 percent. But the motion will not take effect while legal challenges are pending.

Rhoen said it had taken note of B. Braun's move.

(Additional reporting by Andreas Kroener and Frank Siebelt; Editing by Louise Heavens)

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