Baxter acquires privately held Baxa, establishes investment arm

DEERFIELD, Ill.—Baxter International Inc. announced lastmonth the signing of a definitive agreement to acquire privately held BaxaCorp., an Englewood, Colo.-based company focused on developing pharmacytechnology to enhance the safety and efficiency of oral and IV dose preparationand delivery.

At the same time, Baxter also announced its establishment ofBaxter Ventures, a joint venture that will invest up to $200 million in equityin promising early-stage companies developing therapies that complement thecompany's existing portfolio.

Baxter will acquire Baxa for a total upfront cashconsideration of $380 million. The closing is subject to customary closingconditions as well as the expiration of the waiting period under theHart-Scott-Rodino Antitrust Improvements Act.

"With this agreement, Baxa will be able to play a greaterrole in delivering safe medication practices," Greg Baldwin, Baxa chairman andCEO, said in a press release. "We are very pleased to find a partner thatshares our commitment and sees the potential in our products, technology andpeople."

Baxa's annual sales in 2010 were approximately $150 million,and Baxter expects the acquisition of Baxa to be accretive to its future salesgrowth. The company also expects the acquisitive to be neutral to full-year2012 earnings excluding dilution of approximately $0.03 to $0.05 per dilutedshare related to acquisition accounting and transaction-related expenses, andincreasingly accretive in the following years.

Baxa's website states that its mission is "to be a greatmedical device company that continually improves and maximizes long-term valuethrough lifetime partnerships with customers." The company's pharmacy productsinclude automated compounding devices, dose management, pharmacy admixturetools, oral and enteral systems, automated filling systems and IVadministration. Baxa also has a variety of nursing products, including suppliesfor neonatal feeding, oral and enteral systems and IV administration. Baxa'sproduct line includes the ExactaMix Compounder, devices that work to automatemulti-ingredient nutritional solution compounding, as well as its DoseEdgePharmacy Workflow Manager, which provides an integrated system for managing IVand oral dose preparation activities.

"With these new offerings, Baxter will be able to provide acomprehensive solution to fulfill the majority of patients' nutritionalrequirements and increase efficiency in the pharmacy," said Robert M. Davis,president of Baxter's Medical Products business, in a press release regardingthe acquisition. "Bringing this expertise together with Baxter's commercialcapabilities and global reach will enable us to continue to meet our customers'evolving needs and extend our position in IV nutrition and fluiddelivery."

The acquisition is a strong one for Baxter based on theextremely complementary nature of the two companies' businesses. Baxter's areasof expertise include anesthesia, clinical nutrition, infusion systems/IVtubing, pharmaceuticals, solutions and drug delivery.

When combined with the company's drug delivery systems andnutrition products—such as Baxter's multi-chamber, prefilled, premixedcontainers—Baxa's products will boost the company's portfolio and its strengthin its areas of focus.

Premixed medications and pharmacy automation serve tominimize issues in the medication process, in terms of reducing errors indosage and administration and improving effectiveness. Baxter's premixedmulti-chamber containers include essential nutrients for a range of patients,and Baxa's integration and automation technology give hospital pharmacists theability to customize treatments for specific patient populations.

Of Baxter Ventures, Robert L. Parkinson Jr., chairman andCEO of Baxter, said in a statement, "Baxter's mission is to apply innovativescience to develop therapies and medical technologies that save and sustainpatients' lives. As the company's internal capabilities have advanced ourlate-stage pipeline, we have the capacity to further accelerate the early-stagedevelopment of essential therapies."

Baxter Ventures will invest globally and focus on innovativetechnologies with sustainable long-term growth. The company has continued togrow its internal investments in R&D and to pursue business developmentinitiatives, collaborations and alliances as part of its long-term growthstrategy.

Baxter Ventures will report to Dr. Norbert Riedel, Baxter'schief scientific officer.

"Baxter Ventures will allow us to provide companieswith promising, early-stage technologies with the capital and expertise neededto drive successful innovation," said Riedel. "Through thisadditional investment, Baxter will expand its internal pipeline with the goalof further strengthening the company's history of innovative 'firsts' inmedical therapies."