Baxter To Buy Swedish Dialysis Product Maker Gambro For $4 Billion

Baxter To Buy Swedish Dialysis Product Maker Gambro For $4 Billion

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.

Michael Mauboussin: Here’s what active managers can do

michael mauboussin, Credit Suisse, valuation and portfolio positioning, capital markets theory, competitive strategy analysis, decision making, skill versus luck, value investing, Legg Mason, The Success Equation, Think Twice: Harnessing the Power of Counterintuition, analysts, behavioral finance, More Than You Know: Finding Financial Wisdom in Unconventional Places, academics , valuewalkThe debate over active versus passive management continues as trends show the ongoing shift from active into passive funds. Q2 2020 hedge fund letters, conferences and more At the Morningstar Investment Conference, Michael Mauboussin of Counterpoint Global argued that the rise of index funds has made it more difficult to be an active manager. Drawing Read More

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.