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Baxter International Inc BAX

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Morningstar’s Analysis

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Baxter Plans to Acquire Hillrom; Baxter Shares Fairly Valued

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Baxter announced plans to acquire Hillrom for $12.4 billion in enterprise value ($10.5 billion in equity value, or $156 per share) in a transaction that is expected to close in early 2022. We view the combination positively and expect to keep our narrow economic moat rating intact. We see Baxter shares as about fairly valued; at first glance, as we update our model and recognize recent cash flows, we would expect any valuation increase to be limited to the midsingle digits.

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Company Profile

Business Description

Baxter manufactures medical products across seven major reported business segments. The renal segment (32% of 2020 sales) includes peritoneal dialysis and hemodialysis products for chronically ill patients while the acute therapies segment (6%) offers kidney or other organ support tools in intensive care situations. The medication delivery segment (23% of sales) sells IV pumps, administrative sets, and solutions while the nutrition segment (8% of sales) offers parenteral nutrition therapies. The pharmaceuticals segment (18% of sales) offers injectable drugs, anesthetic gases, and compounding services. The advanced surgery segment (8% of sales) provides hemostatic products and biosurgical sealants. Contract manufacturing rounds out the remaining sales.

One Baxter Parkway
Deerfield, IL, 60015
T +1 224 948-2000
Sector Healthcare
Industry Medical Instruments & Supplies
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Classic Growth
Employees 50,000