Baxter flourishes after Hillrom acquisition, eyes growth

USA – After completing its acquisition of Hillrom for a total purchase price of US$10.5 billion in the last quarter of 2021, Baxter, a global leader in medical technology has said it expects the Hillrom deal to contribute up to US$350 million of annual pre-tax cost synergies by 2025.

The company anticipates constant currency sales growth of 4% to 5% on a compounded annual basis from 2022 to 2025.

Baxter also stated that it expects to realize up to US$200 million in incremental annual revenue synergies by 2025, reflecting the impact of market expansion across the broader portfolio as well as new innovation fueled by the acquisition’s expanded capabilities.

Our 2025 outlook demonstrates confidence in our momentum across our expanded portfolio and pipeline, supported by our commitment to ongoing disciplined financial management,” said executive vice president and CFO Jay Saccaro.

Our strategic approach to capital allocation allows us to continue investing in innovation and growth while returning value to our investors, which is a crucial objective of our operating model.”

Hillrom, according to Baxter, was appealing because it would help the company expand its digital capabilities.

Smaller is better than bigger

Baxter’s acquisition of Hillrom occurred at a time when many medtech companies announced plans to split into smaller, more efficient companies.

Baxter paid US$156.00 in cash for each outstanding share of Hillrom common stock, based on Hillrom share counts at closing.

General Electric was possibly the first to join the trend. In November, the company stated that it expected a split that would result in three public companies.

In a second spin-off scheduled for 2024, GE said it would combine its renewable energy, power, and digital businesses into a separate company. The remainder of GE’s operations will be focused on aviation.

A few days after the GE announcement, Johnson & Johnson said it would separate its consumer products business from its medical device and pharmaceutical businesses.

In the most recent developments, Dublin, Ireland-based Medtronic is set to spin off its renal business into new company, merging with Denver-based DaVita.

The new company will develop kidney care products and solutions, including future home-based products, to make different dialysis treatments more accessible to patients.

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