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Baxter Advances Portfolio with Acquisition of Claris Injectables

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Deal overview

On December 15, 2016, Baxter International (BAX) announced the acquisition of Claris Injectables, a subsidiary of Claris Lifesciences, for $625.0 million. Baxter said the deal will be financed through cash, debt, or a combination of both. The acquisition is expected to be completed by the second half of 2017.

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What is Claris Injectables?

Claris Lifesciences is an India-based company, and Claris Injectables is its wholly owned subsidiary with a global presence. Claris Injectables manufactures sterile injectables and has a robust injectables portfolio. Its products are marketed in more than 75 markets with direct sales arrangements in India and the United States.

In 2016, Claris Injectables reported global revenues of more than $100.0 million. The company has witnessed double-digit annual growth over the last several years.

Baxter’s deal rationale

Through the acquisition of Claris Injectables, Baxter International aims to accelerate its strategy to become a leader in the global injectables market. According to Baxter, the global sterile generic injectables market is growing at a CAGR (compound annual growth rate) of 10.0% and is worth more than $40.0 billion.

Pfizer (PFE) is currently the top player in this market. It rose to the leading position through the acquisition of Hospira in 2015. Novartis (NVS) and Mylan (MYL) are some of the other key players.

The acquisition will help Baxter advance its long-term growth and is likely to be accretive to EBITDA (earnings before interest, tax, depreciation, and amortization) and revenue growth. The company expects the deal to yield a double-digit return on invested capital by the fifth year of the deal.

To participate in the growth of Baxter International, you can invest in the Vanguard Value ETF (VTV), which has ~0.20% of its total holdings in Baxter.

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