Baxter strikes $3.8B agreement to sell kidney care business to Carlyle Group

Baxter

(NYSE: BAX)
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announced today that it entered into a definitive agreement under which Carlyle Group acquires its Kidney Care business.

In January 2023, Baxter announced plans to spin its renal care and acute therapies units into an independent, publicly traded company. It said at the time that it expected the company to stand alone in the next 12 to 18 months. In July of last year, Baxter picked “Vantive” as the name of the proposed business.

Early this year, the company disclosed ongoing discussions with private equity firms around the separation of Vantive. Reports last month pegged Carlyle Group, a company with significant medtech experience, as the company set to pull the trigger.

Carlyle’s investments in medtech total more than $40 billion in enterprise value over the past decade or so. It was reportedly in talks last year with Medtronic to acquire the medtech giant’s Patient Monitoring and Respiratory Interventions businesses. In 2014, the group won a bidding war to acquire Johnson & Johnson’s Ortho-Clinical Diagnostics blood testing business for $4 billion. It eventually sold the business to Quidel for $6 billion last year. Carlyle also contributed to a $34 billion investment in Medline in 2021. Carlyle was an investor in One Medical, which sold to Amazon for nearly $4 billion last year.

The investment in Baxter’s Vantive made by Carlyle is made in partnership with Atmas Health, according to a news release. Carlyle tapped Kieran Gallahue to serve as chair, working with CEO Chris Toth and Vantive’s management team. Gallahue previously served as chair and CEO at Carefusion from 2011 until its sale to BD for more than $12 billion in 2015. He also held the post of CEO and director at ResMed from 2008 to 2011, having been president there from 2003 to 2007.

Details of the sale of Vantive

The agreement sees Carlyle acquire Vantive for $3.8 billion. Under the terms, Baxter receives approximately $3.5 billion in cash, with about $3 billion expected in proceeds after tax.

Baxter plans to use proceeds to reduce debt within its stated capital allocation priorities.

The companies expect the transaction to close in late 2024 or early 2025, subject to customary approvals and closing conditions.

Following the completion of the sale, Baxter projects operational sales growth of between 4% and 5%. The company said it plans to continue prioritizing capital allocation. It expects to direct investments toward higher-growth, higher-return opportunities to drive incremental value.

“Today’s announcement represents another critical step forward in the strategic transformation process we announced in early 2023. As a result of this proposed transaction, Baxter will emerge a more focused and more efficient company, better positioned to redefine healthcare delivery and advance innovation that benefits patients, customers and shareholders,” said José (Joe) E. Almeida, chair, president and CEO at Baxter. “I am confident that, under Carlyle’s stewardship and Chris Toth’s leadership, the Vantive team will continue to build on the business’s 70-year legacy as a pioneer in kidney disease and vital organ therapies.”

Vantive provides products and services for peritoneal dialysis, hemodialysis and organ support therapies. That includes continuous renal replacement therapy (CRRT). It has more than 23,000 global employees and registered revenues totaling $4.5 billion in 2023.

“I look forward to partnering with the combined Carlyle and Atmas team and working with my colleagues to advance Vantive’s mission of extending lives and expanding possibilities,” said Toth. “Today’s announcement signals a new chapter in innovation on behalf of the patients and care teams around the world who rely on our solutions. Through this transaction, Vantive will be well-positioned to deepen our commitment to elevating dialysis through digital solutions and advanced services, while looking beyond kidney care to invest in transforming vital organ therapies.”