(Reuters) – U.S. medtech firm Baxter International Inc said on Thursday it would buy rival Hill-Rom Holdings Inc for about $10.5 billion, adding smart hospital beds to its portfolio of patient monitoring and diagnostic products.
Baxter said it would pay $156 per Hill-Rom share, a premium of 7.5% to the stock’s last close. Hill-Rom shares were trading up 3% at 149.85 before the bell on Thursday, while Baxter shares rose 1%.
Media reports had earlier said the companies had been in talks for months and Hill-Rom in July had rejected a $144 per share offer from Baxter, deeming it too low. On Monday, Reuters reported the companies were nearing a deal.
Medical equipment makers in recent months have broadened their offerings through acquisitions to cash in on the sector’s recovery from the pandemic-driven slump last year.
Thermo Fisher Scientific Inc in April agreed to buy contract researcher PPD Inc for $17.4 billion, while Medtronic recently snapped up Intersect ENT in a $936.2 million deal.
Deerfield, Illinois-based Baxter’s business grew in the pandemic due to demand for its renal blood purification systems devices PrisMax and Prismaflex, but has been hit by rising costs and stiffer competition for some products.
106-year-old Hill-Rom makes most of its revenue from its patient support systems, which include smart hospital beds that use sensors and other technology to help monitor patients.
Baxter expects the deal, worth about $12.4 billion including debt, to close early next year and to help grow earnings by more than 20% within the three years after.
However, analysts have presented a mixed view of the deal, with some saying investors could be concerned about Hill-Rom not having fast-growing revenue.
“The key to share performance will depend on how well Baxter can articulate the strategic rationale and allay fears of growth dilution,” Evercore ISI analyst Vijay Kumar wrote in a note on Monday.
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