Deal Value: $3.8bn
Date Announced: 13/08/24
Target Advisors: Perella Weinberg Partners and JP Morgan (financial), Sullivan & Cromwell and Baker McKenzie (legal)
Acquirer Advisors: Barclays and Goldman Sachs (financial), Kirkland Ellis (legal)
On August 13th, 2024, Carlyle, a private equity firm and Atmas health, a healthcare investment platform, agreed to acquire the Vantive kidney care segment of Baxter, a global medtech company for $3.8 bn. The deal will be paid in all cash and constitutes a 100% stake in the target segment. The transaction is intended to close in Q4 of 2024 or Q1 of 2025, subject to regulatory approval.
Company Details (Acquirers – Carlyle, Atmas Health)
Carlyle has been a leading private equity investor ($426bn AUM) in the medtech industry over the past decade, having completed other investments into the sector such as acquiring stakes in: Medanta, Resonetics and CureApp. Carlyle’s investment in Vantive is being made in partnership with Atmas Health, a company founded by 3 industry executives in 2022, with a focus on acquiring and building a leading healthcare business. Kieran Gallahue of Atmas Health will serve as the Chairman of Vantive, working alongside current Vantive CEO Chris Toth and the Vantive leadership team.
Company Details (Target – Vantive)
Vantive is a leader in global kidney care, with product offerings for haemodialysis, peritoneal dialysis and organ support therapies, including continuous renal replacement therapy (CRRT). The business has 23,000+ employees globally and, in 2023, brought in revenues of $4.5bn. Before the deal, Vanguard (11.75%), Blackrock (11.70%) and Pzena Investment Management (6.04%) were the largest shareholders in the business.
Deal Details and Rationale
In January 2023, Baxter announced its intent to create a standalone kidney care company as part of its strategic realignment. By March 2024, Baxter had announced it was in discussions to explore a potential sale of the segment in a carve-out style deal.
The acquisition allows Baxter to streamline operations and focus on its core medtech and pharmaceutical business. For Carlyle and Atmas Health, the deal represents a strategic opportunity to grow Vantive as a standalone entity. The renal care market, valued at $112.5bn, with a forecasted CAGR of 8.3% (’24 – ’30) as of 2023, represents significant growth potential driven by the aging global population. Synergies include Carlyle’s expertise in scaling healthcare businesses and potential expansion into emerging markets and new technologies, leveraging Atmas Health’s specialization in renal care for industry-specific operational insights.
In my opinion, this deal provides strategic benefits to all parties. Though a premium has been paid (The $3.8bn purchase price represents an EV/EBITDA multiple of roughly 12x, slightly above the industry peer average of 11.6x), Carlyle and Atmas have positioned themselves to take advantage of a fast-growing segment. If Carlyle and Atmas can enhance Vantive’s operational efficiency and expand its global footprint, the deal may yield significant long-term returns. With the sale, Baxter can refocus on maintaining an annual growth rate of 4-5% and reducing its leverage to below 3.0x by Q4 of 2025, using the proceeds of the sale to pay off outstanding debts.
Written by: Karl Dumasia
Sources: Mergerlinks, Press Releases, Forbes, Privitas
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