Deerfield, Illinois–based Baxter paid $156 in cash for each outstanding share of Hillrom common stock, totaling a purchase price of $10.5 billion. Adding in the assumption of Hillrom’s outstanding debt obligations, the transaction’s enterprise value comes to approximately $12.5 billion.
That purchase price reflects a 26% premium to Hillrom’s closing stock price on July 27, 2021, the last trading day before media reports speculating on the potential transaction, as the companies had previously confirmed when they announced acquisition plans in September. When Hillrom announced its fourth-quarter earnings results, the company said the merger remained on track to close in 2022, but the completion has come a few weeks before the new year.
Baxter has stated that it expects approximately $250 million in annual pre-tax cost synergies by the end of year three due to the acquisition. In addition, the company expects the deal to be low double-digit accretive to the company’s adjusted EPS in the first full year after closing, increasing to more than 20% by year three.
“The Baxter-Hillrom combination unlocks the next phase of our transformation, presenting a new wave of potential to drive greater impact for patients, clinicians, employees, shareholders and other communities we serve worldwide,” Baxter Chairman, President & CEO José (Joe) E. Almeida said in a news release. “Integrating our complementary capabilities introduces additional opportunities for growth across our broad geographic footprint and also creates remarkable new possibilities for connectivity with leading-edge digital health innovation focused on enhancing care, lowering costs and increasing workflow efficiency.”
Baxter plans to build on its existing global footprint, which includes commercial and service infrastructure, to expand legacy Hillrom and Welch Allyn products in new international markets.
“We are invigorated by the potential to create value for patients and customers in new ways as a combined company,” Almeida said. “We are energized by the power we bring together as one team united in our mission to save and sustain lives. We are very excited to welcome our Hillrom colleagues to Baxter.”