DGAP-Adhoc

Fresenius SE & Co. KGaA: Fresenius Kabi to strengthen and diversify product portfolio by acquiring Akorn and Merck KGaA's biosimilars business - Seite 2

Mid-term, the acquisition is expected to create cost and growth synergies of approximately US$100 million p.a. before tax. Fresenius Kabi expects a progressive ramp-up of those synergies which will be achieved by integrating and modernizing Akorn's production network and by combining other functions. For the period from 2018 to 2022, Fresenius Kabi expects integration costs of approximately US$140 million before tax in total. The integration costs are projected to be frontloaded with the major impact in 2018.

Fresenius expects the acquisition to be accretive to Group net income^** and Group EPS^** in 2018, excluding integration costs, and to contribute positively from 2019 onwards including integration costs.

Akorn's board recommends the approval of the transaction and merger agreement with Fresenius Kabi to its shareholders. Akorn's largest shareholder, who beneficially controls approximately 25% of its shares, has committed to supporting the transaction. The transaction is subject to customary closing conditions, including regulatory review under the Hart-Scott-Rodino Antitrust Improvements Act in the U.S. and approval by Akorn shareholders. Closing is expected by early 2018.

The purchase price will be financed by a broad mix of Euro and US-Dollar denominated debt instruments.

Entry into growing biosimilars market

Fresenius and Merck KGaA announced today that Fresenius Kabi will acquire Merck's biosimilars business, which comprises the entire development pipeline and an experienced team of more than 70 employees located in Aubonne and Vevey, Switzerland. The product pipeline has a focus on oncology and autoimmune diseases.

Fresenius Kabi expects first sales towards the end of 2019 and estimates to ramp-up the business to high triple-digit million sales from 2023 onwards based on the current product development schedule. Fresenius Kabi has agreed to pay single digit percentage royalties to Merck based on sales.

The purchase price will be up to EUR670 million. Thereof, EUR170 million will be paid in cash upon closing. Approximately EUR500 million are milestone payments strictly tied to achievements of development targets. Analytical testing, clinical studies, quality requirements specific to biosimilars as well as marketing and sales activities are expected to result in increased costs for Fresenius Kabi. These costs are expected to occur in uneven tranches. The total expected cash-out and self-imposed investment ceiling is estimated to be up to EUR1.4 billion until projected EBITDA break-even in 2022. From 2023 onwards, the acquisition is expected to be significantly accretive to Group net income^** and Group EPS^**.