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Baxter's Biopharmaceuticals Split Plan Gets Board Approval - Analyst Blog

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Baxter International Inc.BAX recently announced the approval of its board of directors for the planned split of the company's biopharmaceuticals business into a separate company to be called Baxalta Incorporated.

The company also apprised a special dividend distribution for 80.5% of the outstanding shares of Baxalta stock. The special dividend is expected to be paid on July 1, 2015. Baxter will own the remaining 19.5% stake in the new company,

Per the announcement, shareholders will receive one share of Baxalta common stock for each share of Baxter common stock held, as of June 17, 2015. Shareholders will receive cash in place of fractional shares.

Effective July 1, 2015, Baxalta is expected to begin regular trading as an independent company on the New York Stock Exchange (NYSE) under the ticker symbol "BXLT".

Baxter expects when-issued trading for both the companies to begin from June 15, under the symbol "BAX WI" for Baxter and "BXLT WI" for Baxalta.

As announced in Mar 2014, Baxter will split its biopharmaceuticals and medical device segments into two independent companies. While Baxter International will focus on lifesaving medical products, Baxalta will emphasize on the development and marketing of innovative biopharmaceuticals.

Last month, executives from both Baxalta and Baxter provided an update on individual financial outlook.

Baxter expects constant currency sales growth of approximately 4% on a compounded annual basis through 2020. Adjusted operating margin is projected to expand roughly 100 basis points (bps) annually, from 9% in the second half of 2015 to about 14% by 2020 on a comprehensive margin improvement strategy.

Baxalta, on the other hand, expects constant currency sales growth of 6-8% and adjusted operating income growth of at least 8%, each on a compounded annual basis from 2016 through 2020. This growth is anticipated to enhance adjusted operating margin from approximately 29% in the second half of 2015 to approximately 30-31% in 2020.

Zacks Rank

Currently, Baxter has a Zacks Rank #3 (Hold). Better-ranked medical stocks at the moment include AMN Healthcare Services AHS , Cancer Genetics CGIX and INC Research Holdings INCR . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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