Baxter raising $3.5B to close Gambro megadeal

Baxter ($BAX) aims to become the global leader in dialysis devices with a $4 billion acquisition of Gambro, and now the company is looking to scrape together $3.5 billion to get the deal done.

Five sets of senior notes between three and 30 years in length will be sold to raise the cash, and the company disclosed plans in an SEC filing to use $3 billion of the proceeds to close the Gambro buyout and the remainder for general corporate expenses. Baxter announced the deal back in December, saying it expected to complete financing and regulatory approvals in the first half of this year.

Assuming all goes according to plan, Baxter, the world's second-largest dialysis maker, will acquire No. 2 on that list in Gambro, vaulting it over the market-leading Fresenius Medical ($FMS). If Baxter can't get the deal done by March 17, 2014, the company will redeem its three-, 10- and 30-year notes at 101% of their principle amounts.

Baxter CEO Robert Parkinson

But Baxter's counting on its all-time largest acquisition to come through in time, giving it the lion's share of a growing market. Baxter has already capitalized well on the U.S. kidney dialysis space, but integrating Gambro's global presence will give it a strong foothold in Latin America and Asia, CEO Robert Parkinson has said, and the deal will increase Baxter's offerings in hemodialysis.

And it's timing could hardly be better, as Fresenius is struggling with personnel costs and currency woes, watching its profits sink 39% to $225 million last quarter and U.S. dialysis product sales slip 2% to $183 million.

Gambro is currently owned jointly by Swedish private equity firms EQT Partners AB and Investor AB, who bought the company in 2006 after production flaws with some of its dialysis machines led the FDA to temporarily ban their sale in the U.S.

- read Baxter's term sheet

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