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THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED PURSUANT
TO RULE 901(d) OF REGULATION S-T
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
February 2, 1996
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Date of Report
BAXTER INTERNATIONAL INC.
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(Exact name of registrant as specified in its charter)
Delaware
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(State or other jurisdiction of incorporation)
1-4448 36-0781620
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(Commission file number) (IRS Employer Identification No.)
One Baxter Parkway, Deerfield, Illinois 60015
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 948-2000
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(Page 1 of 7 pages)
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Item 5. Other Events.
On February 2, 1996, the Registrant issued a press release; the text
of which is attached hereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BAXTER INTERNATIONAL INC.
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(Registrant)
By: /s/ A. Gerard Sieck
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A. Gerard Sieck
Secretary
Date: February 2, 1996
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FOR IMMEDIATE RELEASE:
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MEDIA RELATIONS CONTACTS: Jill Carter, (847) 948-4555
Mary Thomas, (847) 948-2815
INVESTOR RELATIONS CONTACTS: Jessica Fisher, (847) 948-4639
Neville Jeharajah, (847) 948-2875
Mike Pascale/Joele Frank
Abernathy MacGregor Scanlon, (212) 371-5999
BAXTER OFFERS $3.8 BILLION FOR W. R. GRACE'S NMC UNIT;
ACQUISITION WOULD CREATE GLOBAL RENAL THERAPY LEADER
DEERFIELD, Ill., February 2, 1996 -- Baxter International (NYSE:BAX)
announced today that it has sent a formal offer to W. R. Grace & Co. (NYSE:GRA)
and to each of its directors to acquire its National Medical Care, Inc. (NMC)
subsidiary in a tax-free transaction valued at $3.8 billion.
Baxter's proposal is simple, straightforward and fair. Baxter's proposal
involves payment to Grace of $2.0 billion, comprised of a cash dividend, notes
and assumed debt, and $1.8 billion in Baxter common stock, to be issued to Grace
shareholders in exchange for all of the stock of NMC. The transaction would be
structured as a tax-free spin-off of NMC to Grace shareholders, followed by a
tax-free merger of NMC and a Baxter subsidiary.
"This transaction is a compelling proposal for shareholders, patients,
customers and employees around the world," said Vernon R. Loucks Jr., chairman
and chief executive officer of Baxter. "Without question, Baxter is the best
and most logical acquirer of NMC. Grace would receive an attractive price for a
business it has decided to spin off, with a consideration that combines a
significant cash component with highly-liquid New York Stock Exchange-listed
Baxter shares.
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Baxter's renal care business would, in turn, benefit from the fuller integration
of renal-care technology and delivery, from a market for our products, from
greater potential for international expansion, and from manufacturing and
overhead synergies," Loucks said.
Harry M. Kraemer Jr., senior vice president and chief financial officer,
said, "both NMC and Baxter's renal businesses have profitable growth, strong
returns on investment, and significant cash-flow generation. Given the
opportunities for revenue enhancement and operating efficiencies that this
combination has the potential to create, we believe this transaction would lead
to earnings dilution of less than 5 percent in the first year following closing,
and would be accretive to earnings within six quarters following closing."
"This transaction is well within Baxter's financial capability. Our debt-
to-capital ratio is 36 percent; it would only increase to approximately 42
percent following an NMC transaction, and would improve to below 40 percent by
year-end 1997."
Terms of the proposed transaction call for Baxter to issue $1.8 billion in
Baxter common stock to the Grace shareholders in exchange for all of the
outstanding shares of NMC. The transaction also calls for NMC to provide $2
billion of liquidity to Grace, comprising a $1.275 billion cash dividend,
assumption of $425 million of expected existing indebtedness, a $300 million
note, and for Baxter and NMC to enter into a long-term supply agreement. The
governmental and other undisclosed financial liabilities of NMC have been
addressed in the terms of Baxter's proposal, which provide that the financial
liability to Baxter would not exceed $100 million. Grace would retain
responsibility for liabilities, if any, in excess of that sum.
Baxter's proposal is subject to normal regulatory approvals, to the
execution of a definitive agreement, and to the approval of the then-NMC
shareholders after the spin-off from Grace.
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Grace, which last year indicated its intent to spin off NMC to its
shareholders, has been in discussions with Baxter about various strategic
alliances, and last week told Baxter it would consider a proposal concerning
NMC. Grace has not responded to Baxter's offer, which was made January 31 in a
letter to Albert J. Costello, Grace's chief executive officer, with a request to
respond within 24 hours. Grace has not indicated any willingness to enter
discussions with Baxter about this proposal, and Baxter has not conducted due
diligence. Baxter would be willing to negotiate all aspects of its proposal.
The acquisition of NMC, the world's largest operator of kidney-dialysis
centers and related services, would make Baxter a leader in all aspects of the
$24 billion global renal-therapy market, and enable the company to provide the
full spectrum of products and services for treating chronic kidney disease.
Baxter's renal business, which accounted for approximately $1.3 billion of
the company's nearly $10 billion in 1995 sales, is a leading manufacturer and
distributor of dialysis-therapy products. NMC, based in Waltham,
Massachusetts, had 1994 sales of approximately $1.9 billion, largely from the
operation of more than 600 dialysis treatment centers in the U.S. and abroad.
"The unique combination of Baxter and NMC would provide a full continuum of
renal care, including both technologies and services," said Donald W. Joseph,
president of Baxter's renal business. "This is entirely consistent with the
trend toward managed care, and specifically toward comprehensive disease-state
management programs for our patients and the health-care professionals who treat
them. Our quality standards lead the industry, and we are committed to their
continuation in a combined company. We value our relationships with the nation's
hospitals, where today NMC has 500 renal care contracts. We look forward to
working closely with them, and with any other interested hospitals, through
alliances, partnerships or outright sale to interested hospitals, in order to
further improve the quality and cost-effectiveness of renal patient care,"
Joseph stated.
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Baxter International, through its subsidiaries, is the leading manufacturer
and marketer of health-care products and services to health-care providers in
nearly 100 countries. The company concentrates research-and-development
programs in biotechnology, cardiovascular medicine, renal therapy and related
medical fields.
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