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Baxter International (BAX) To Buy Gambro AB For $4B From Investor AB, EQT IV

 December 04, 2012 08:29 AM

(By Balaseshan) Baxter International Inc. (NYSE: BAX) said it has agreed to buy privately-held Lund, Sweden-based dialysis product company Gambro AB for 26.5 billion Swedish krona or about $4 billion from Investor AB and EQT IV.

Baxter expects this transaction to be dilutive to adjusted earnings per share (EPS) by $0.10 to $0.15 in 2013 and neutral to modestly accretive to adjusted EPS in 2014. Excluding the impact of special items and estimated amortization of intangible assets, the company expects this transaction to be neutral to adjusted EPS in 2013, and accretive in 2014 by $0.20 to $0.25.

The company expects this transaction to be increasingly accretive to adjusted earnings per diluted share beyond 2014 and, in addition to an array of commercial synergies, projects opportunities for annual cost synergies totaling about $300 million by 2017.

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Baxter now expects over its five-year long-range financial plan to increase sales (excluding the impact of foreign currency) by 7% to 8% and to grow adjusted EPS in the 8% to 10% range, both on a compounded annual basis.

The transaction will be financed through a combination of cash generated from overseas operations and debt. Baxter expects to maintain its current dividend payout ratio of about 40%.

The acquisition gives Baxter a comprehensive dialysis product portfolio, complements Baxter's global home dialysis offerings, and positions the company to better meet the evolving needs of the large and growing dialysis market.

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The value of Gambro's equity is 18.3 billion Swedish krona after deducting net debt of 8.2 billion Swedish krona (net debt as of signing).

In 2006, EQT and Investor, through Indap AB, took Gambro private through a joint public offer. In conjunction with Indap's public offer, Investor contributed its 20% ownership in Gambro for a 49% ownership in Indap while releasing cash of 3.6 billion Swedish krona.

Total proceeds to Investor will be about 10.5 billion Swedish krona. The proceeds will be used for investments in existing Core Investments, to delever subsidiaries and return Investor's leverage to the target range of 5% to 10%.

The closing of the transaction is expected to occur in the first half of 2013.

BAX closed Monday's regular session down 0.71% at $65.80. The stock has been trading between $47.55 and $68.91 for the past 52 weeks.

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