Baxter offloads biopharma solutions unit for $4.25 billion
08 May 2023
Acquisition
Baxter announced Monday that it signed a definitive agreement to divest its biopharma solutions business to Advent International and Warburg Pincus for $4.25 billion in cash. The unit has been providing sterile contract manufacturing solutions, parenteral delivery systems and support services to the pharma and biotech industries for decades.
The business "has long been recognised worldwide as a trusted and preferred partner of contract manufacturing services for the pharmaceutical and biotech industries," remarked Baxter CEO Joe Almeida, adding that under the stewardship of Advent and Warburg Pincus, the unit "will continue to build on its leadership position."
Expected $600 million in revenues
Baxter said the divestiture "further streamlines [its] strategic focus and represents an important milestone in its ongoing business transformation." The proposed transaction, which is expected to close in the second half of 2023, includes biopharma solutions manufacturing facilities and approximately 1700 employees in Bloomington, Indiana, and Halle, Germany. Baxter estimates the business will generate roughly $600 million in revenues on a reported basis this year.
"As a standalone company…the biopharma solutions unit will operate as a premier, independent end-to-end CDMO (contract development and manufacturing organisation) providing a range of services for clients, from clinical research to commercial deployment," Baxter stated. It added that the biopharma solutions business "should be well-positioned to accelerate its go-to-market strategy and clinical development pipeline, execute on throughput expansion and drive further product innovation."
Baxter intends to put the after-tax proceeds of about $3.4 billion toward lowering its debt. For the full fourth quarter, the company says the transaction will result in dilution of approximately $0.10 per share to the company's earnings, depending on the time of close. It noted that this amount is expected to be partially offset through reduced interest expense payments following anticipated debt repayment.
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