Baxter Seals $3.8B Deal With Carlyle For Its Kidney Care Segment

On Tuesday, Baxter International Inc BAX agreed to sell its Kidney Care segment, Vantive, for $3.8 billion to The Carlyle Group Inc CG

Baxter will receive approximately $3.5 billion in cash, with net after-tax proceeds currently estimated at approximately $3 billion.

Baxter announced its intention to create a standalone kidney care company in January 2023 as part of its broader strategic realignment designed to enhance future performance and create value for all stakeholders.

In March 2024, Baxter announced that it was in discussions to explore a potential sale of the segment.

Vantive offers products and services for peritoneal dialysis, hemodialysis, and organ support therapies, including continuous renal replacement therapy.

The business has more than 23,000 employees globally and had 2023 revenues of $4.5 billion.

The transaction is expected to close in late 2024 or early 2025.

Following the completion of the pending sale of Kidney Care, Baxter is targeting operational sales growth of 4% to 5% annually.

For 2025, the company anticipates an adjusted operating margin of approximately 16.5% on a continuing operations basis, which reflects an anticipated 100-basis-point negative impact due to stranded costs and the manufacturing supply agreement Baxter will enter into upon the completion of the divestiture of the Kidney Care segment.

Baxter will continue prioritizing capital allocation and expects to direct investments toward higher-growth, higher-return opportunities to drive incremental value.

To support these efforts, Baxter will focus on deleveraging and expects to achieve its investment-grade target of a debt-to-equity ratio below 3.0x by the end of 2025. This goal will be supported by using proceeds from the sale of its Kidney Care segment to repay outstanding debt, including its new bridge facility.

Price Action: BAX stock is down 6.9% at $34.37 at last check Tuesday. The stock initially gained following the announcement but has since reversed.

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