Baxter International Inc., a global medtech company, has signed an agreement to divest its BioPharma Solutions (BPS) business to Advent International, one of the largest private equity investors, and Warburg Pincus, a leading global growth investor.
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Under the terms of the definitive agreement, Baxter will receive $4.25 billion in cash, subject to certain closing adjustments, with net after-tax proceeds currently estimated to be approximately $3.4 billion.
The transaction is expected to close in the second half of 2023, subject to receipt of customary regulatory approvals and satisfaction of other customary closing conditions. Baxter intends to utilise the after-tax proceeds to reduce its debt, consistent with the company’s stated capital allocation priorities.
For the full fourth quarter 2023, Baxter estimates the transaction to result in dilution of approximately $0.10 per share to the company’s earnings, the total amount depending on the time of close. This amount is expected to be partially offset through reduced interest expense payments following anticipated debt repayment.
Jose E Almeida, Chairman, President, and CEO of Baxter, said that the agreement was an important step in Baxter’s ongoing transformation journey as the company continues to execute against its strategic priorities, enhance focus and create additional value for all the stakeholders.
He said that BPS has long been recognised worldwide as a trusted and preferred partner of contract manufacturing services for the pharmaceutical and biotech industries. Advent International and Warburg Pincus have extensive experience helping innovative healthcare companies advance their mission and strategic priorities.
“I am confident that under their stewardship, BPS will continue to build on its leadership position, foster world-class talent, invest in new capabilities and capacity, and provide leading-edge, high-quality solutions for its clients,” he added.
A leading provider
BPS has been a leading provider of sterile contract manufacturing solutions, parenteral delivery systems and customised support services to the pharma and biotech industries for decades. As a standalone company and in partnership with Advent and Warburg Pincus, BPS will operate as a premier, independent end-to-end CDMO providing a range of services for clients, from clinical research to commercial deployment.
BPS should be well-positioned to accelerate its go-to-market strategy and clinical development pipeline, execute on throughput expansion and drive further product innovation. The proposed transaction includes BPS manufacturing facilities and approximately 1,700 employees in Bloomington, Indiana and Halle, Germany. BPS is expected to generate revenues of approximately $600 million on a reported basis for full year 2023.
John Maldonado, a Managing Partner at Advent said that BPS is a premier asset at the forefront of the biopharma industry, and his company has been closely following for a number of years. “Leveraging our deep sector expertise and significant strategic resources, we believe this partnership can unlock multiple opportunities for growth and help the business realise its full potential by serving blue-chip customers, including Baxter, with high-value, specialised and end-to-end capabilities as a standalone company. We’re thrilled to partner with BPS to alleviate critical pain points for its customers and to help them provide life-changing therapies to patients around the world,” Maldonado added.
TJ Carella, Managing Director, and Head of Healthcare at Warburg Pincus said: “BPS’s success and exceptional market reputation within the pharmaceutical sector position the company well to continue to grow its mission-critical services across a variety of therapeutic areas including oncology, metabolic disease, and infectious disease, among others.
He added: “We are excited to partner with Advent and the impressive team at BPS who have developed differentiated technical capabilities and established an industry-leading reputation for quality and reliability in the supply chain for parenteral drugs.”
For over 30 years, Advent has been investing in the healthcare sector and has completed over 50 investments in 17 countries worldwide across a range of sub-sectors, including pharmaceuticals, life sciences and medical devices.
Since inception, Warburg Pincus has invested over $16 billion in more than 180 healthcare companies, including Summit Health, Modernizing Medicine, Ensemble Healthcare Partners, and Global Healthcare Exchange, and has been an active investor in life sciences, with notable investments in Polyplus, Norstella, Sotera Health, and Bausch + Lomb, among others.