Baxter International Inc. (NYSE:BAX) is set to buy Gambro AB in a $4 billion deal that’s expected to close early next year.
Gambro AB is a Swedish medical supply company, so the acquisition will enable Baxter International Inc. (NYSE:BAX) to expand its line of dialysis products and also gain market share across the globe. Baxter already provides treatments for a variety of diseases, including immune disorders, hemophilia, and others.
The purchase of Gambro AB is a key move for Baxter, because as Forbes points out, more than 2 million patients around the globe require some form of dialysis, and that number is increasing by 5 percent or more each year, possibly because of increasing rates of various chronic conditions.
Gambro’s production facilities are located in nine different countries, and approximately 7,500 people are employed by the company. So far the acquisition of Gambro is Baxter International Inc. (NYSE:BAX)'s largest by far, although the company has acquired several other companies within the last 24 months. The largest acquisition for Baxter previously was a mere $700 million.
Last year Gambro’s sales were $1.6 billion across all of its products, which include a number of different dialysis machines. Baxter posted $13.89 billion in sales last year. The renal sector of the medical industry currently makes up about a fifth of Baxter’s annual revenue, so the acquisition of Gambro could expand that sector for the company.
Except for special items, Baxter executives believe the acquisition will reduce earnings per diluted share by 10 to 15 cents next year and be neutral or make modest gains the following year. They do not believe that the deal will affect earnings for next year, except for special items and amortization estimations. For the following year, they believe this deal will add 20 to 25 cents per diluted share.
In morning trades, shares of Baxter International Inc. (NYSE:BAX) were trading just slightly lower, losing less than 1 percent of their value.