Carlyle Group Eyes Buyout of Baxter's Kidney Care Unit

Carlyle Group CG is considering acquiring Baxter International's BAX kidney care spinoff, Vantive, in a deal valued at more than $4 billion, including debt. The news was first reported by Wall Street Journal, citing people familiar with the matter.

Per the source, the companies started exclusive negotiations in late June and an agreement could be announced as soon as this week. However, there is a chance that the discussions will fail or another bidder may emerge.

More than a year after announcing plans to separate the unit due to supply-chain issues and waning demand for dialysis operations, Baxter said in March that it has been in talks with selected private equity investors about the possibility of selling the kidney care unit.

Baxter plans to spin off Vantive in the second half of 2024, intending to separate its acute therapies and renal care business.

In 2023, Carlyle pulled back from investments in U.S. consumer brands. With the exit, CG's private equity business, U.S. strategy, focused on investments in health care, government services, industrials, technology and financial services.

Markedly, Carlyle has been witnessing solid organic growth in the past several years on the back of strategic investments. The company is focusing on scaling its investment platforms, building out infrastructure credit and real estate credit and foraying into new avenues. These efforts are expected to support revenue growth. Our model estimates total revenues to witness a CAGR of 12.8% in the next three years ending 2026.

Also, the company's global presence and efforts to expand business are expected to continue aiding asset under management growth and boost its investment performance.

Carlyle would be making a big move if it were to acquire Vantive, since private equity deal-making is gradually picking up steam.

Recently, Piper Sandler Companies PIPR announced a definitive agreement to buy Aviditi Advisors, an alternative investment bank. The acquisition will enhance the company's capabilities in fundraising, secondary solutions and direct investment capital. Thus, it will further solidify PIPR's leadership position in the private equity M&A and capital markets sectors.

Shares of CG have gained 31.7% in the past year compared with the industry's rise of 25.4%.

Image Source: Zacks Investment Research

CG currently carries a Zacks Rank #2 (Buy).

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