Baxter has agreed to acquire Swedish medical technology Gambro for $4bn in a deal that will expand its efforts in treating renal disease.
Gambro develops and manufactures dialysis products and therapies for patients with acute or chronic kidney disease, which Baxter said would complement its existing business in the therapy area, where it is already the world leader in home-based peritoneal dialysis.
Baxter’s chair and CEO Robert Parkinson noted that the acquisition would particularly strengthen Baxter’s haemodialysis portfolio with its addition of such devices as the Artis system and the AK 96 system, both of which are used to monitor the removal of waste products from the blood of patients with renal failure and are generally used in hospitals rather than a home setting.
This will also provide Baxter with a stronger position from which to challenge its big rivals in the kidney disease market – US-based DaVita and Germany-based Fresenius Medical Care, which leads the haemodialysis field.
“This transaction will provide attractive returns and enhance Baxter’s sales and earnings growth over the company’s current long-range financial plan,” Parkinson said.
Gambro reported annual sales of about $1.6bn in 2011 across its portfolio, which also includes several products in continuous renal replacement therapy (CRRT).
This will give a significant boost to Baxter’s already strong renal division, which reported revenues of $2.5bn in 2011 – an increase of 6 per cent on the previous year. This accounted for 18 per cent of Baxter’s total sales during the year.
Gambro’s presence in Europe will also expand US-based Baxter’s global footprint, with both Latin America and Asia-Pacific also cited as areas of potential growth for the company once its new acquisition is completed.
Despite the deal’s potential there has been some analyst concern about the price of the deal, which Baxter intends to help finance by scaling back its share buyback programme.
Nevertheless, Baxter said it expects the deal to increase sales by 7 to 8 percent over the next five years on a compounded annual basis, while adjusted earnings per diluted share are expected to grow by 8 to 10 per cent.