Bad Homburg, Germany-based Fresenius said it would offer €22.50 per share for Rhön, a 52.3% premium to the target's Wednesday close.

Rhön founder Eugen Munch committed his remaining 12.5% to the offer but Rhön's board said it didn't expect the bid and would have to evaluate it before making a recommendation.

"The recommendation will not only relate to the reasonableness of the price, but also to the question whether the bid also safeguards the interests of the company and also especially the legitimate interests of its employees," Rhön said.

Fresenius has been working to exploit the privatization of Germany's largely municipally owned hospital network since it bought hospital management company Helios Kliniken GmbH for €1.5 billion seven years ago. It's since snapped up a strng of smaller regional hospitals and sales at its Helios hospital unit climbed 11% in the first quarter to €717 million.

The acquisition will give Fresenius a company with €2.6 billion in annual sales at 53 hospitals and 39 clinics. Rhön has 16,000 beds at its facilities and treated just under 2.3 million patients in 2011. It had 2011 profit of €161 million.

"By extending our health care network across the entire country, we will bring some 75% of Germany's people within an hour's drive of one of our hospitals," said Fresenius CEO Ulf Schneider in a statement.

Schneider first telegraphed the acquisition in a March interview in Focus magazine. The executive said the company was also giving its upstart biotech division until the end of the year to produce results. If the unit continued to underperform, he said they would "consider other options".

Fresenius said it would pay for the acquisition with a syndicated loan; a new bond; and up to €1 billion in equity instruments. It already has financing from Deutsche Bank AG, J.P. Morgan Chase & Co., Societe Generale SA, Credit Suisse Group and UniCredit SpA.

Shareholders representing one share over 90% of the target's stock must tender their stock for the offer to be successful.

Rhön share leapt 46.1%, or €6.81, to €21.58, close to the offer price, while Fresenius shares slipped 2.7%, or €1.98, to €71.97 as investors wondered if the money wouldn't be better spent on faster-growing markets or products.