Multinational medical products company Baxter International Inc. (NYSE:BAX) whose assets include patient monitoring and diagnostic products announced on September 2 that it is set to acquire global medical technology company Hill-Rom Holdings, Inc. (NYSE:HRC) referred to as Hillrom in a $10.5 billion deal that is aimed to expand their connected care solutions.
As per the agreement, Baxter will pay $156.00 cash per share of Hillrom, whose products include smart hospital beds, totaling approximately $10.5 billion and a total enterprise value around $12.4 billion, which includes debt assumption. The deal was unanimously approved by the respective Board of Directors for Baxter and Hillrom. The pending acquisition is subject to the approval of Hillrom shareholders and other customary closing conditions; the deal is expected to close by early next year.
The companies asserted that the transaction will allow them to broaden their array of medical products and services to “patients and clinicians across the care continuum and around the world, facilitating the delivery of healthcare that is patient- and consumer-centered and focused on improving clinical outcomes” as well as improving market share and position. As a result of the deal, there is anticipated acceleration of the companies’ expansion into digital and connected care solutions. Baxter expects the deal to increase earnings by more than 20% within three years of closing.
According to the companies, in fiscal year 2020, Baxter’s net sales were $11.7 billion from renal care, medication delivery, pharmaceuticals, clinical nutrition, advanced surgery, acute therapies, and biopharma solutions. Meanwhile, in fiscal year 2020, Hillrom’s net sales were $2.9 billion from patient support systems, front line care, and surgical solutions.
The day before the deal was announced, Baxter’s shares were valued at $77.60; on the day the deal was announced, September 2, share prices were $81.06; and on September 3, the shares were valued at $82.71. In comparison, Hillrom’s share price on September 1 was $145.06; on September 2, the day the deal was announced, the shares were valued at $151.80; and on September 3, the shares price was $151.68. So far in 2021, there have been 25 deals in the health care industry that are over $25 million.
Baxter’s legal counsel is Sullivan & Cromwell LLP and its financial advisors are Perella Weinberg Partners, J.P. Morgan Securities LLC and Citibank, N.A. and Hill-Rom is represented by Wachtell, Lipton, Rosen & Katz and its financial advisors are Goldman Sachs & Co. LLC and BofA Securities, Inc.