Baxter to sell its kidney-care business in a $3.8 billion deal to Carlyle Group

By Tomi Kilgore

Net proceeds of about $3 billion will be used to pay down debt

Shares of Baxter International Inc. gained ground early Tuesday, after the healthcare-products company announced an agreement to sell its kidney-care business - to be named Vantive - to private-equity investor Carlyle Group Inc. in a deal valued at $3.8 billion.

"As a result of this proposed transaction, Baxter will emerge a more focused and more efficient company, better positioned to redefine healthcare delivery and advance innovation that benefits patients, customers and shareholders," said Baxter Chief Executive José Almeida.

Baxter's stock (BAX) rose 0.2% in premarket trading, while Carlyle shares (CG) were still untraded.

Under terms of the deal, which is expected to close in late 2024 or early 2025, Baxter will receive about $3.5 billion in cash. Net after-tax proceeds from the deal are estimated to be about $3 billion, which Baxter plans to use to pay down debt.

In January 2023, Baxter had said it planned to spin off its kidney-care business into an independent, publicly traded company, as part of the company's strategic plan to improve operations. Then, in March 2024, the company said it was in discussions for a possible sale of the business.

"After reviewing the financial impact of the potential separation pathways, management and the Baxter Board determined that selling the business to Carlyle should maximize value for Baxter stockholders and best position Baxter and Vantive for long-term success, with enhanced flexibility to deploy capital toward opportunities that seek to accelerate each company's respective growth objectives," Baxter said.

Baxter's stock has lost 4.5% year to date through Monday, while the Health Care Select Sector SPDR ETF (XLV) has gained 9.6% and the S&P 500 has advanced 12.1%.

-Tomi Kilgore

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08-13-24 0807ET

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