The new offer comes a month after Hillrom rejected a $9.6 billion takeover offer from Baxter, Bloomberg News reported earlier. Hillrom saw Baxter’s proposal of about $144 a share as too low, according to people with knowledge of the matter. Baxter was expected to return with a higher bid, the people said.
Both companies’ boards have unanimously approved the deal, according to a statement announcing the agreement. The acquisition, which needs approval from Hillrom shareholders and regulators, is expected to close by early next year.
Chicago-based Hillrom makes a range of equipment including hospital beds, stretchers, patient monitors, operating tables and electrocardiographs. Medical products giant Baxter is based in Deerfield.
Medical device and supply companies have been consolidating as they seek to sell a wider range of products to their hospital clients. Large deals such as Medtronic’s $43 billion acquisition of Covidien and the $25 billion purchase of St. Jude Medical by Abbott Laboratories have prompted other firms to pursue scale through acquisitions.
“Baxter and Hillrom share a common vision for transforming healthcare to better serve all patients and providers,” José Almeida, chairman, president and CEO of Deerfield-based Baxter, said in the statement. “Patients increasingly want to receive their care at home or nearby, while hospitals and other care providers are increasingly using digital health technologies to expand access, improve quality and lower costs. Baxter and Hillrom are uniting to meet the challenges of a rapidly evolving global healthcare landscape, while also creating significant value for all the stakeholders we serve.”
Almeida will remain chairman, president and CEO after the deal closes.
Hillrom President and CEO John Groetelaars said in the statement: “We are proud of the steps we have taken to transform Hillrom into a medical technology leader with an innovative portfolio of connected care solutions. Today’s milestone announcement represents a win-win for all stakeholders. Patients and caregivers will benefit from enhanced capabilities across the continuum of care, our shareholders will receive a significant and immediate premium for their investment, and our employees will benefit from being part of a larger, stronger company with accelerated growth opportunities.”
According to the statement, “Baxter expects the combination to result in approximately $250 million of annual pre-tax cost synergies by the end of year three. This estimate excludes any benefit from potential new revenue growth opportunities resulting from the combination of the two organizations.”
Baxter stock was up about 4.1% this morning and and Hillrom shares were up about 4.3%.
Bloomberg contributed.
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