Fresenius creates financial flexibility
Ms. Hennicken, Fresenius recently completed the sale of shares in Fresenius Medical Care. Why did you decide to make this move now?
For us, this is more than just a capital market transaction – it is another strategic step. The „Future Fresenius“ program, launched in 2022, focuses on streamlining, simplification, and performance. Under this framework, Fresenius initiated the deconsolidation of Fresenius Medical Care (FMC). The reduction of our stake is a logical continuation and, at the same time, the first visible step of the „Rejuvenate“ strategy phase, which we started in 2025 on a strong foundation. The timing was important for us from multiple perspectives.
Did you set a price threshold for yourselves at which Fresenius would initiate a share sale?
Since its deconsolidation, Fresenius Medical Care has been an investment outside our core business. Accordingly, we act like any other shareholder.
A shareholder who takes profits when the opportunity arises?
The main focus of Future Fresenius is reducing the company's debt through its own efforts. We have succeeded in doing so and have proven it. We have followed an organic path and deliberately did not touch our stake in Fresenius Medical Care. This was never about a quick fix but about reducing debt through our own strength.
But an active shareholder, no matter how disciplined, cannot fail to notice when a stock in their portfolio is performing well?
We have clear goals and priorities in our capital allocation. Of course, the FMC stock has performed well since its deconsolidation, rising by 25%. The company has also made significant earnings progress. Altogether, this influenced the micro-timing of our share monetization.
Fresenius has reduced its stake by 7%, bringing it down to 25% plus one share. Half of this was sold through a direct placement, and the other half via an exchangeable bond. What are the advantages of this combination?
Through the direct placement, we benefit from the strong recent performance of Fresenius Medical Care’s stock. The 600 million euros exchangeable bond with a zero-coupon rate is advantageous from a refinancing perspective. At the same time, it allows us to participate in further stock price increases.
The exchangeable bond is a very attractive financing instrument for us.
Sara Hennicken
Wouldn't it have been more effective to sell everything at once to reduce debt more quickly? Despite good prospects, there is still stock price risk.
The exchangeable bond is a very attractive financing instrument for us. With a zero-coupon rate, it has a negative yield over its three-year term. The 30% premium allows us to benefit from future stock price increases. The bond will be converted if Fresenius Medical Care’s stock is just under 58 euros at maturity. Otherwise, we have issued a bond on very favourable terms, which we will then repay. With these two instruments, we were also able to target different investor groups and optimise volume and pricing.
Which types of investors participated?
Both books include long-only funds and hedge funds. The exchangeable bond specifically appeals to investors focused on the equity-linked market – a market that accounts for option components. We took advantage of that.
Were there any regional investor preferences?
Since both transactions were conducted via accelerated bookbuilding after market close, and books closed the same evening, the time window was very tight. Therefore, within capital markets regulations, we focused on European and US investors, as well as European branches of US institutions.
The exchangeable bond is an attractive financing instrument for Fresenius. But what made it so appealing to investors despite its zero-coupon rate?
You would have to go back to 2021 to find an exchangeable bond with similarly low yields over its term. There has been little supply in this segment in recent years, which contributed to strong interest. And investors particularly appreciated that it combines two key elements: an option component linked to Fresenius Medical Care’s stock price and a credit component tied to Fresenius.
Fresenius raised a total of 1.1 billion euros gross through these two instruments. How will the proceeds be used?
We will allocate the funds in line with our capital allocation priorities. Strengthening the balance sheet and reducing debt remain our top priorities. At the same time, we want to reinforce our core business across our three growth platforms. This includes expanding our product pipeline and increasing capacities.
We believe in FMC's upside potential and want to see a corresponding return.
Sara Hennicken
By how much will interest expenses decrease in 2025 due to this share reduction?
The impact will be in the low double-digit million range. We are still operating in an environment where market interest rates are above our average cost of debt. Thanks to our strong operating cash flow in 2024, we will require less refinancing this year, even without the sale of FMC shares. This will also help us reduce interest expenses in the current year and keep them below 2024 levels.
Fresenius CEO Michael Sen emphasized after the stake reduction that the company intends to maintain a blocking minority in FMC in the long term. This contrasts with previous market expectations of a complete separation. What has changed?
We continue to follow our strategy of focus, simplification, and performance. Selling 7% of Fresenius Medical Care was a significant and appropriate step. This does not change our overall strategy, or the fact that we view FMC as an investment and see ourselves as an active shareholder.
What return targets must such an investment company meet?
There is no fixed percentage. We believe in FMC's upside potential and want to see a corresponding return.
