Baxter Completes Gambro Acquisiton

Zacks

Baxter International, Inc. (BAX) has completed the acquisition of Lund, Sweden-based privately-owned renal products company Gambro AB for $3.9 billion, utilizing cash generated from overseas operations and debt issuances.

The acquisition will enable Baxter to expand sales in developed markets such as Europe as well as in emerging markets including Latin America and Asia-Pacific, where the company has already grown its peritoneal dialysis (:PD) business.

Gambro is engaged in research, production and sale of dialysis offerings. The company is a world-wide supplier of dialysis offerings utilized in continuous renal replacement treatment and hemodialysis. As a result, the acquisition will boost Baxter’s global leadership position in renal market and help the company provide a comprehensive portfolio in the burgeoning dialysis market.

Further, the acquisition will help BAX build its core portfolio of investigational home hemodialysis (HD) and automated PD systems with the addition of Gambro’s dialyzers, devices and dialysis solutions, next-generation monitors, and acute therapies to treat patients with kidney, liver and lung problems.

Baxter International, a Zacks Rank #3 (Hold) stock, reported second-quarter adjusted (excluding one-time items) earnings per share of $1.16, which beat the Zacks Consensus Estimate by 3 cents and surpassed the year-ago earnings by 4%. The second-quarter result also exceeded the company’s earlier stated guidance of $1.12–$1.14.

Revenues for the quarter went up a tad 3% (up 4% at constant exchange rate or CER) to $3,669 million, missing the Zacks Consensus Estimate of $3,707 million. On a geographic basis, U.S.-based revenues in the quarter improved 3%, while international revenues rose 3% (up 4% at CER).

For the third quarter of 2013, the company expects growth in revenues of 5% (6% at CER). Including the impact of the Gambro AB acquisition, revenues are projected to grow 9%–12% (10%–13% at CER) and adjusted earnings per share are expected to be in the band of $1.18 and $1.21.

Baxter revised its forecast for 2013, which includes the impact of Gambro acquisition. For 2013, Baxter expects reported sales growth in the range of 8%–9% at CER compared to the earlier projection of 10%. The company raised its adjusted earnings per share forecast to the range of $4.62−$4.70 (earlier $4.60− $4.70) for 2013.

Most of the top peers of BAX are currently performing well. They include Alere Inc. (ALR) with a Zacks Rank #1 (Strong Buy), and Advaxis Inc. (ADXS) and Boston Scientific Corporation (BSX), both with a Zacks Rank #2 (Buy).

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