Baxter to divide into two companies

Baxter International Inc. announced this week that it will create two separate, independent global health care companies to sell its products––one for biopharmaceuticals and the other for medical products.

The corporate headquarters of both companies will be located in northern Illinois. Robert L. Parkinson, Jr., will serve as chairman and chief executive officer of the medical products company, which will retain the Baxter International name. Ludwig N. Hantson, PhD, who currently serves as President of BioScience, will be named chief executive officer of the new biopharmaceuticals company, which Baxter said will be named at a later date.

The medical products business, with 2013 annual sales of more than $9 billion, offers intravenous solutions and nutritional therapies, drug delivery systems and administration sets, premixed and other injectable drugs, as well as inhalation anesthetics and hospital-based biosurgery products. This business is also integrating the Gambro AB acquisition.

The medical products company will focus on expansion through its extensive hospital presence and global footprint, Baxter said in a release.

"Baxter has an established history of executing successful spin offs, and we have continued to evaluate the separation of these two businesses in response to diverging business dynamics and the rapidly changing macro-environment," said Robert L. Parkinson, Jr., Baxter's chairman and chief executive officer. "This decision underscores Baxter's commitment to ensuring its long-term strategic priorities remain aligned with shareholders' best interests, while improving our competitive position and performance, enhancing operational, commercial and scientific effectiveness, and creating value for patients, health care providers, and other key stakeholders."

Baxter's biopharmaceuticals business, with 2013 annual revenues of approximately $6 billion, includes recombinant and plasma-based proteins to treat hemophilia and other bleeding disorders, and plasma-based therapies to treat immune deficiencies, alpha-1 antitrypsin deficiency, burns and shock, and other chronic and acute blood-related conditions.

Transaction details
The transaction is intended to take the form of a tax-free distribution to Baxter shareholders of a new publicly traded stock in the new biopharmaceuticals company. The transaction is expected to be completed by mid-year 2015, pending Board of Directors approval. Baxter said it expects to incur one-time charges related to the transaction during the reporting periods preceding the separation and does not otherwise expect this to impact the company's financial guidance for 2014.