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Baxter Files Form 10 with SEC, Advances Baxalta Spin-off

Zacks Equity Research

Baxter International Inc. (BAX) has announced the filing of an initial Form 10 Registration Statement with the U.S. Securities and Exchange Commission (SEC.TO) in connection with its previously announced plan to spin off its biopharmaceuticals business.

In Mar 2014, Baxter announced its intention to separate its biopharmaceuticals and medical device segments into two independent companies – Baxter International Inc. and Baxalta Incorporated. While Baxter International will focus on lifesaving medical products, Baxalta Incorporated will emphasis on the development and marketing of innovative biopharmaceuticals.

The Form 10 filing outlines Baxter’s plans to spin off at least 80% of the outstanding common stock of Baxalta through a tax-free distribution to Baxter shareholders, with Baxter retaining the remaining shares. Baxter plans to dispose of the Baxalta common stock in a disciplined manner over a period of time not exceeding five years.

The retained equity stake by Baxter of up to 20% of Baxalta’s shares will provide additional flexibility in the capital structures of the two new entities apart from enhancing shareholders’ value.

Baxter expects to complete the splitting up process in mid-2015, subject to market, regulatory and certain other conditions, including the final approval by Baxter’s board, receipt of a favorable opinion and/or rulings with respect to the tax-free nature of the transaction, and the effectiveness of the Form 10 registration statement filed with the SEC.

Baxter’s rationale behind the spin-off is to put greater management focus on the two businesses, effectively commercialize product offerings, efficiently allocate resources to high growth areas, and bring flexibility in deciding on growth and investment strategies.

Upon completion of the spin-off, Baxalta will trade on the NYSE under the symbol BXLT. The logo and visual identity of Baxalta are yet to be unveiled.

Meanwhile, Baxter International will continue trading on the NYSE under the symbol BAX. The corporate headquarters of both the companies will be located in northern Illinois, as stated earlier.

Currently, Baxter carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the medical products industry include ICU Medical (ICUI), OraSure Technologies (OSUR) and Abaxis (ABAX). While both ICU Medical and OraSure Technologies sport a Zacks Rank #1 (Strong Buy), Abaxis carries a Zacks Rank #2 (Buy).

Read the Full Research Report on BAX
Read the Full Research Report on ABAX
Read the Full Research Report on OSUR
Read the Full Research Report on ICUI


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