Fresenius will acquire APP Pharmaceuticals, the US manufacturer of intravenous drugs, for $3.7 billion (£1.9 billion) in a deal that will help the German dialysis specialist break into the American market.

Shares in Fresenius fell on worries about the price – around 5.7 times APP’s sales - and APP’s $940 million net debt.

APP shareholders will receive $23 a share in cash, a 29 per cent premium to the last closing share price, and could receive a further $6 a share in the second quarter of 2011 if APP beats a core profit target.

Fresenius stock dropped by as much as 11 per cent and was 7.7 per cent lower at €50.30 by 8.30am today, making it the biggest faller on a 1.1 per cent firmer German market. Shares closed down 9 per cent at €49.5.

Karl-Heinz Scheunemann, an analyst with LBBW, said: “We think the acquisition makes sense as it fits with Fresenius's strategic core activities.”

Analysts at Citigroup said the deal was at a “premium valuation” but APP’s earnings would grow by between 15 and 16 per cent a year, which justified the price.

APP, which is based in Illinois, specialises in injectable generic drugs for hospital use and makes around 100 drugs for oncology, anaesthesia, analgesia and infections in the US and Canada. It employs about 1,400 people.

Ulf Schneider, chief executive of Fresenius, said: “APP is a fast-growing, highly profitable company and has a strong management team that has an excellent market position in the US.”

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