Medical products giant Baxter International (BAX) has inked a definitive deal to buy privately-held medical devices company Baxa Corporation for $380 million in cash. The transaction is expected to be completed after antitrust clearance and other customary closing conditions.
Colorado-based Baxa, develops pharmacy technology for safe and effective preparation and delivery of oral and intravenous drugs. The entity generated sales of roughly $150 million in 2010. Baxa’s broad product/solution range include the ExactaMix compounder, an automated compounding system, and the DoseEdge pharmacy workflow manager, an integrated system for managing oral and intravenous dose preparation.
The acquisition bodes well for Baxter as the addition of Baxa’s products will complement its nutrition products and drug delivery systems. With these new products, the company will be able to offer a complete solution to meet the nutritional needs of the majority of patients.
Nutrition is regarded as a key element of therapy and both the entities are committed to advancing the delivery of intravenous nutrition leveraging their novel technologies. Baxter expects the deal to be neutral to its 2012 earnings and accretive afterwards.
Baxter is a leading global medical products and services company that develops, manufactures and markets products to treat hemophilia (a bleeding disorder), kidney and infectious diseases. Its medical products business offers products (including multi-chamber containers and premixed drugs and drug-reconstitution systems) used in the delivery of drugs and fluids to patients. Baxter competes with Becton, Dickinson and Company (BDX) and Johnson & Johnson (JNJ), among others.
Baxter’s products are primarily life-sustaining, which partly insulates it against economic downturns. The company is able to generate recurring revenues, and consistent cash flow, due to its focus on chronic diseases.
On the other hand, despite recent improvement in Plasma Proteins and Antibody Therapy sub-segments, we are concerned about stagnation in sales, a slightly somber outlook for some hospital spending and tightening of reimbursement. We currently have a Neutral recommendation on Baxter.
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