Warburg Pincus and Advent International, two private equity firms, are reportedly leading the way in the acquisition of Baxter International’s biopharma solutions unit. Anonymous insiders have said that the potential deal could reach or exceed $4 billion.
Other private equity firms and major players in the biomedical sector, including Thermo Fisher Scientific, have also shown an interest in the unit, but it appears that Warburg Pincus and Advent International have submitted the most attractive offer. The consortium has even turned to other private equity firms to help fund the deal.
However, despite the advanced nature of the talks, it remains unclear whether Warburg Pincus and Advent International will successfully complete the acquisition. Baxter International may opt to sell to another bidder or keep the business, according to the insiders. All parties involved in the negotiations have so far declined to comment.
Baxter International’s biopharma solutions unit provides support to drugmakers in the formulation, development, and commercialization of drugs that are typically given by infusion or injection, such as biologics and vaccines. The unit is viewed as a non-core business, and Baxter International has been exploring a sale in order to enhance its focus and improve its capital structure.
Baxter International’s market value is currently $23 billion, and in January, the company announced that it would explore a sale of the biopharma solutions unit, along with plans to spin off its renal care and acute therapies units. Baxter International stated that the dialysis operations, which are a part of its renal care unit, had become a drag on its margin. The sale of the biopharma solutions unit could help to pay down the company’s $16.4 billion debt pile.
It is not only Baxter International that is exploring divestitures. In October, Medtronic unveiled a plan to spin off its patient monitoring and respiratory interventions businesses, which have since attracted interest from potential buyers.
The potential acquisition of Baxter International’s biopharma solutions unit by Warburg Pincus and Advent International is indicative of the current trend for companies to divest non-core businesses in order to focus on core competencies and reduce debt. The final outcome of the talks remains to be seen, but it is clear that there are significant strategic and financial benefits to be gained from such a deal.
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