Baxter agrees to sell kidney care business for $3.8 billion to investment firm Carlyle
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Key takeaways:
- Baxter agrees to divest its kidney care business to investor group Carlyle for $3.8 billion.
- Carlyle has been a private equity investor in the medical technology sector for the past decade.
Baxter International has agreed to sell its kidney care business to investment group Carlyle for $3.8 billion, according to a press release.
Baxter had originally announced its intention to create a standalone kidney care company, called Vantive, in January 2023, naming Chris Toth as CEO. In March, the company said it was in discussions to explore a potential sale of the business and in July said it would be open to a sale to Carlyle.
“Today’s announcement represents another critical step forward in the strategic transformation process we announced in early 2023,” José “Joe” E. Almeida, chair, president and CEO at Baxter Healthcare, said in the release. “As a result of this proposed transaction, Baxter will emerge a more focused and more efficient company, better positioned to redefine health care delivery and advance innovation that benefits patients, customers and shareholders.
“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.”
Under the terms of the agreement, Baxter will receive approximately $3.5 billion in cash with net after-tax proceeds estimated to be approximately $3 billion. Baxter will use after-tax proceeds from the transaction to reduce its debt, according to the release.
Vantive has more than 23,000 employees globally and had 2023 revenues of $4.5 billion, according to the release. The transaction is expected to close late this year or early next year.
Editor’s note: The headline of the story was updated on Aug. 16, 2024, to reflect the correct sale price. The editors regret the error.
Perspective
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When Steve Jobs was recruiting Pepsi executive John Scully to replace him as Apple CEO, he asked, “Do you want to sell sugar water or change the world?”
The subsequent change in the Apple business model was disastrous and it took the exit and return of Steve Jobs to restore the company.
Baxter has exited the dialysis business, most notably peritoneal dialysis. The original plan to have a separate spun-off public company has now changed to a sale to private equity group Caryle. What will be the impact on patient care?
Baxter was not just a dialysis business selling peritoneal dialysis products — 1.5%, 2.5% and 4.25% dextrose solutions rather than the approximately 11% sucrose solution of Pepsi. Baxter sold a “therapy.” Baxter invested generously in education at all levels over decades. Many of us either learned about PD from a Baxter clinician specialist or saw Baxter recruit the person we learned PD from to work at the company.
The contributions to our knowledge base from Baxter employees like the late Steven Guest, MD, were incredible. Baxter also invested heavily in research and produced innovative products. The customer service — from answering the phone to delivering the product to the patient’s house — was superior.
Now, this model likely moves to nostalgia.
On the positive side, perhaps this sale will promote competition on innovation, cost, clinical effectiveness and customer service. The FDA seems more willing to work with innovators (eg, in-home dialysate production).
And so, I ask the question of the Carlyle Group and others, “Do we want to sell sugar water or change the world?”
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