Saturday, August 6, 2011

Fresenius Medical to buy Liberty Dialysis

Fresenius Medical Care AG, a worldwide dialysis provider, has snapped up a pair of U.S. competitors — including one with a Brentwood connection — bringing more consolidation to an industry facing cost pressures.

Bad Homburg, Germany-based Fresenius agreed to buy Liberty Dialysis Holdings for $1.7 billion, one of two acquisitions announced by the German company on Tuesday. Last year, Liberty had merged with Brentwood-based Renal Advantage.

Fresenius Medical also will buy American Access Care Holdings LLC for $385 million.

Liberty Dialysis, a closely held company based in Mercer Island, Wash., has 260 clinics with annual revenue of about $1 billion. Its deal with Fresenius is expected to close early next year.

“Fresenius has certainly shown that scale matters,” said Lisa Clive, a London-based analyst for Sanford C. Bernstein Ltd. Clive has an “outperform” recommendation on the Germany company’s stock. She said the latest deals make “strategic sense.”

Bigger dialysis chains have an advantage under a new U.S. Medicare reimbursement system. Called the bundled rate, the new system is a fixed compensation amount designed to reduce overuse of drugs that were previously separately billable, Clive said.

American Access runs outpatient clinics for procedures such as fistulas and grafts that give permanent surgical access to veins, reducing the need to use temporary catheters for dialysis blood-cleaning treatment. Using such procedures may help Fresenius reduce the number of expensive-to-treat infections, Clive said.

Shareholders of Liberty Dialysis include private equity companies KRG Capital Partners, which is based in Denver, and Bain Capital, based in Boston.