Investing.com – Hillrom stock (NYSE:HRC) traded 4.4% higher and Baxter (NYSE:BAX) 0.5% up in Thursday’s premarket as the two companies agreed to combine.
As per the terms, Baxter will pay $156 for each share of Hillrom, a 7.5% premium to the stock’s closing on Wednesday. That assigns the company an equity value of $10.5 billion, and a total enterprise value including debt of $12.4 billion.
Hillrom is a maker of hospital beds and patient-monitoring devices. Baxter is a medical-technology company focusing on critical care, nutrition and surgical products.
Baxter expects the combination to result in around $250 million of savings in costs. It said the deal is EPS accretive and that it will finance it through a combination of cash and debt.
The transaction is expected to close by early 2022.
In the interim, Baxter issued long-term financial guidance that ignores any impact from the proposed acquisition.
Baxter expects sales to grow 4%-5%, compounded annually from 2021 to 2024.
(CORRECTION: An earlier version of this story incorrectly stated the enterprise value of the combined group.)