Done Deal: Baxter Acquiring HillRom for $12.4 Billion

After months of labored courtship, this week HillRom agreed to be acquired by Baxter for $10.5bn of equity value (or $12.4bn of enterprise value which accounts for HillRom’s net debt) in an all cash transaction.  Baxter had originally offered $144 per share for HillRom, was rebuffed and ultimately ended up entering the merger agreement at $156 per HillRom share.

HillRom, famous for its long history of making hospital beds, has been acquisitive over the last decade as a part of an effort to transition into medical devices, digital health products, software for patient monitoring and diagnostics. With COVID, HillRom accelerated development for remote patient monitoring technologies.

Baxter’s thesis for the acquisition is that HillRom will allow it to provide a broader range of medical products and accelerate its own efforts in digital offerings. The transaction is expected to close in early 2022 and Baxter expects to realize $250m of cost-savings over the next three years.

Of interest, Baxter expects to use debt to help finance the acquisition. The Company estimates that it will have net leverage of roughly 4.2 times net debt to pro forma adjusted EBITDA at closing. BAX is committed to an investment grade credit rating and plans to deleverage to net leverage of 2.75 times within two years of closing.