Baxter Launches Bid to Dominate Dialysis Market

Baxter International, one of the largest health care suppliers in the world, is in discussions with Swedish dialysis product maker Gambro in a bid to buy the company for $4 billion. The acquisition would be a long-sought addition to Baxter’s dialysis holdings, according to the Wall Street Journal (WSJ).

Based in Deerfield, IL, Baxter manufactures peritoneal dialysis machines for home dialysis, and Gambro would give Baxter access to the hospital market for hemodialysis and other products. If Baxter is able to complete the deal, the company could dominate the kidney dialysis market, Forbes reported.

“This is a market that is going to grow for a long time,” Baxter chairman and CEO Bob Parkinson said during a conference call in early December with Wall Street investors and analysts, according to Forbes.

Under Parkinson’s leadership, Baxter’s financial situation has improved, allowing the company to attempt a deal of this magnitude, Forbes reported. S&P Capital IQ added that if Baxter were successful in buying Gambro it would be Baxter’s biggest acquisition ever.

The synergies between the two companies would benefit Baxter’s current portfolio of products. Baxter’s bioscience division produces such products as plasma-based proteins to treat hemophilia, and its medical products unit manufactures equipment for injecting various fluids and drugs, according to the WSJ.

Gambro, a company held by two Scandinavian private-equity firms, positions itself as “the leader in blood purification therapies in the hospital setting.” Sales of its products—including hemodialysis devices such as advanced monitors, dialyzers, bloodlines, cyclers, and dialysis solutions—totaled $1.6 billion in 2011, Forbes reported.

Baxter’s Parkinson said the Gambro deal is a good fit for Baxter overall, and would provide a platform for additional deals and growth in developing regions.

Reuters reported that Baxter posted sales of $13.89 billion in 2011.

At the end of the third quarter of 2012 Baxter had $3.19 billion in cash, and announced it would spend $1 million in cash from overseas operations and accrue an additional $3 billion in debt to complete the deal. Baxter had about $3 billion in cash flow in 2011, according to WSJ.

January 2013 (Vol. 5, Number 1)