US regulator requires Fresenius Medical Care, NxStage to divest bloodline tubing set business as condition of merger

The US Federal Trade Commission voted 3-2 to approve Fresenius Medical Care's proposed $2-billion acquisition of NxStage Medical, with the provision that the companies divest all rights and assets related to the latter's bloodline tubing set business to B. Braun Medical as part of a settlement resolving charges that the proposed merger would be anticompetitive.

The FTC's complaint claims the proposed merger "would likely result in substantial competitive harm" to the US market for bloodline tubing sets used in haemodialysis. The commission argued that Fresenius Medical Care and NxStage are two of only three "significant suppliers" of bloodline tubing sets used in open architecture haemodialysis machines in the US, adding that the two companies together control 82 percent of the market for bloodlines.

Specifically, the FTC requires Fresenius Medical Care and NxStage to divest to B. Braun all assets and rights tied to R&D, manufacturing, marketing and selling of the bloodline tubing sets no later than 10 days after completion of the acquisition, expected in the first quarter of 2019. The proposed order also requires the companies to supply B. Braun with bloodline tubing sets for a limited time, while it establishes its own manufacturing capability.

The FTC added that if it determines that "B. Braun is not an acceptable buyer, or that the manner of the divestiture is not acceptable, the proposed order requires the parties to unwind the sale of rights to B. Braun and then divest the products to an FTC-approved buyer or buyers within six months of when the order becomes final."

Fresenius Medical Care said last month that the end-date for the NxStage merger agreement was extended to August 6 as a result of the recent US government shutdown.

Separately, Fresenius Medical Care indicated Wednesday that it expects both adjusted revenue and net income to rise at a mid-to-high single-digit rate in 2020 as its investments, which include the deal to buy NxStage, begin to deliver.

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