Medical products giant Baxter on Monday announced it’s completed a $10.5 billion purchase of Hillrom, a company that sells hospital beds, patient monitors and other medical equipment.
Here are five things to know about the transaction:
1. Baxter—which announced plans to purchase Hillrom in September—paid $156 per outstanding share of Hillrom’s common stock, creating a purchase price of $10.5 billion. The enterprise value of the transaction is an estimated $12.5 billion when including Hillrom’s outstanding debt. Hillrom earlier this year reportedly had rejected a $9.6 billion takeover offer from Baxter.
2. Baxter officials said they expect combining the businesses to generate a high single-digit return on invested capital by five years post-transaction and an estimated $250 million in annual pre-tax cost synergies by the end of year three. They expect the deal to be accretive in the low double-digits to Baxter’s adjusted earnings per share in the first year post-close.
3. Baxter officials said they plan to bring Hillrom products into new international markets and innovate on the combined company’s medical device portfolio by adding connectivity, digital health, data analytics and other technologies to create connected products across patient homes, physician offices, ambulatory care centers and hospitals.
“Integrating our complementary capabilities introduces additional opportunities for growth across our broad geographic footprint and also creates remarkable new possibilities for connectivity,” said José Almeida, Baxter’s chairman, president and chief executive officer, in a news release.
4. Baxter named Giuseppe Accogli—previously Baxter’s senior vice president and president for the Americas and global business units—to the new role of executive vice president and chief operating officer. Baxter’s board of directors also appointed Nancy Schlichtin, retired president and CEO of Henry Ford Health System who had served on Hillrom’s board, to the board.
5. 2021 has been a big year for mergers and acquisitions of digital health companies. There were 203 deals reported in the first three quarters of the year, according to data from Modern Healthcare’s Digital Health Business & Technology, up from 132 transactions in the same period of last year and 125 in the first three quarters of 2019.