Big announcement by US multinational with two Mayo plants

Baxter International Inc., a global medtech leader with plants and significant staff numbers in Castlebar and Swinford, has announced that they have signed a definitive agreement under which Carlyle is to acquire Baxter's Kidney Care segment, to be named Vantive, for $3.8 billion.

Under the terms of the definitive agreement, subject to certain closing adjustments, Baxter will receive approximately $3.5 billion in cash with net after-tax proceeds currently estimated to be approximately $3 billion.

Baxter announced its intention to create a standalone kidney care company in January 2023 as part of its broader strategic realignment designed to enhance future performance and create value for all stakeholders.

In March 2024, Baxter announced that it was in discussions to explore a potential sale of the segment.

After reviewing the financial impact of the potential separation pathways, management and the Baxter board determined that selling the business to Carlyle should maximize value for Baxter stockholders and best position Baxter and Vantive for long-term success, with enhanced flexibility to deploy capital toward opportunities that seek to accelerate each company's respective growth objectives.

Baxter intends to use after-tax proceeds from the transaction to reduce its debt, consistent with its stated capital allocation priorities.

Carlyle has been a leading private equity investor in the medtech sector over the past decade, with investments in medical technology and diagnostic companies totaling over $40 billion in enterprise value.

Moreover, Carlyle's investment in Vantive is made in partnership with Atmas Health, a collaboration among three industry executives founded in September 2022 to focus on acquiring and building a market-leading healthcare business.

"The announcement represents another critical step forward in the strategic transformation process we announced in early 2023.

"As a result of this proposed transaction, Baxter will emerge a more focused and more efficient company, better positioned to redefine healthcare delivery and advance innovation that benefits patients, customers and shareholders," said José (Joe) E. Almeida, chair, president and chief executive officer at Baxter.

"I am confident that, under Carlyle's stewardship and Chris Toth’s leadership, the Vantive team will continue to build on the business's 70-year legacy as a pioneer in kidney disease and vital organ therapies."

Vantive is a leader in global kidney care, offering products and services for peritoneal dialysis, hemodialysis and organ support therapies, including continuous renal replacement therapy (CRRT).

The business has more than 23,000 employees globally and had 2023 revenues of $4.5 billion.

"I look forward to partnering with the combined Carlyle and Atmas team and working with my colleagues to advance Vantive's mission of extending lives and expanding possibilities," said Chris Toth, executive vice president and group president, Kidney Care at Baxter, who will serve as Vantive's CEO.

"The announcement signals a new chapter in innovation on behalf of the patients and care teams around the world who rely on our solutions.

"Through this transaction, Vantive will be well-positioned to deepen our commitment to elevating dialysis through digital solutions and advanced services, while looking beyond kidney care to invest in transforming vital organ therapies."

The transaction is expected to close in late 2024 or early 2025, subject to receipt of customary regulatory approvals and satisfaction of other closing conditions.

Following the completion of the pending sale of Kidney Care, Baxter is targeting operational sales growth of 4% to 5% annually, driven by innovation and continued market expansion.

For 2025, the company anticipates an adjusted operating margin of approximately 16.5% on a continuing operations basis, which reflects an anticipated 100 basis point negative impact due to stranded costs, net of anticipated transition service agreement (TSA) income, and the manufacturing supply agreement (MSA) the company will enter into upon the completion of the divestiture of the Kidney Care segment.

Baxter will continue to prioritise capital allocation and expects to direct investments toward higher-growth, higher-return opportunities to drive incremental value.

Baxter plans to provide additional details regarding the company's longer-term strategic and financial outlook at an investor conference in 2025.

In addition, the company expects to post financial schedules reflecting the kidney care segment as a discontinued operation for certain historical periods prior to the release of its third-quarter 2024 earnings results.