Baxter International, Inc., says it plans to create two independent global healthcare companies, effectively separating its biopharmaceuticals and medical products.
What will become two business, Baxter’s biopharmaceuticals and medical products already operate pretty independently, so this decision represents little more than an obvious evolutionary step. The two businesses operate in distinct markets with corresponding underlying fundamentals, and each possesses unique and compelling growth prospects, investment requirements and risk profiles. The spinoff will create two, well-capitalized independent companies with strong balance sheets, investment grade profiles, and disciplined approaches to capital allocation.
In addition, Baxter believes that the separation will result in other material benefits to the stand-alone companies, including the obvious ones that derive from improved management of more focused businesses. Furthermore, by separating, each business will have the flexibility to pursue growth and investment strategies resulting in revenue acceleration, improved profitability and enhanced returns.
Specifically Baxter’s medical products business, with 2013 annual sales of more than $9 billion, offers a broad portfolio of intravenous (IV) solutions and nutritional therapies, drug delivery systems and administration sets, premixed and other injectable drugs, as well as inhalation anesthetics and hospital-based biosurgery products. This business is also integrating the Gambro AB acquisition, which complements Baxter’s existing renal therapies franchise and provides customers a comprehensive portfolio of products and services to treat end-stage renal disease across the full continuum of care. The medical products company will now be able to focus on strengthening its market leadership through geographic expansion and increased penetration, leveraging its extensive hospital presence and global footprint, developing comprehensive solutions to improve patient outcomes and safety, and enhancing profitability through a more streamlined and flexible cost structure.
Baxter says the transaction will likely take the form of a tax-free distribution to Baxter shareholders of a new publicly traded stock in the new biopharmaceuticals company, and should be completed by mid-year 2015, subject to market, regulatory and certain other conditions.
”Baxter has an established history of executing successful spinoffs, and we have continued to evaluate the separation of these two businesses in response to diverging business dynamics and the rapidly changing macro-environment,” said Robert L. Parkinson, Jr., chairman and chief executive officer. ”This decision underscores Baxter’s commitment to ensuring its long-term strategic priorities remain aligned with shareholders’ best interests, while improving our competitive position and performance, enhancing operational, commercial and scientific effectiveness and creating value for patients, healthcare providers, and other key stakeholders.”
Source: Baxter International, Inc., Marketwired