Baxter completes Kidney Care business sale and receives about $3.71 billion in net cash proceeds

Baxter International Inc. (NYSE: BAX) completed the sale of its Kidney Care business on January 31, 2025. The company reported the closing in a Form 8-K whose date of report is January 31, 2025. The sale covers all issued and outstanding equity interests in seven entities that the filing calls the Divested Entities. Four are U.S. corporations or limited liability companies: Vantive Health LLC, which the filing calls KidneyCo, Vantive Mexico LLC, Gambro Renal Products, Inc. and RTS Worldwide Holdings Inc. The other three are Vantive Holding B.V. in the Netherlands, Vantive Health GmbH in Switzerland and Vantive Holding Limited in Jersey.

The buyer

The buyer is a group of four entities. They are Spruce Bidco I, Inc., Spruce Bidco II, Inc., Spruce Bidco I Limited, an Irish corporation, and CP Spruce Holdings, S.C.Sp, a Luxembourg special limited partnership. The filing treats them together as one "Buyer." It names CP VIII Spruce GP S.à r.l. as the managing general partner of CP Spruce Holdings, but it does not name the investors behind the group.

The purchase agreement is an Equity Purchase Agreement dated as of August 12, 2024, between the buyer and Baxter. Baxter filed it as Exhibit 2.1 to its Form 8-K filed on August 13, 2024.

The price

At signing, the buyer and Baxter agreed to an aggregate purchase price of $3.80 billion in cash, subject to certain closing cash, working capital and debt adjustments. After those adjustments, Baxter received approximately $3.71 billion of net, pre-tax cash proceeds at closing. The filing says that figure remains subject to certain post-closing adjustments.

The 8-K does not itemize the adjustments that took the figure from $3.80 billion to $3.71 billion, and it does not say when the post-closing adjustments will be settled.

The amendment signed at closing

A First Amendment to the purchase agreement is dated January 31, 2025, the same day the sale closed. It is filed as Exhibit 10.1. The 8-K says the amendment provides, "among other things," that the closing of the sale of the interests, other than any transactions at a local closing, is effective at 11:59 p.m. Eastern Time on the closing date.

The phrase "among other things" means the amendment changes more than the closing time. The 8-K describes none of the other changes.

Employee equity awards

The purchase agreement sets out what happens to unvested equity and cash-based retention awards held by employees of the divested business. As of the closing date, those awards vested on a pro rata basis. The pro rata portion is measured by calendar days elapsed in each award's vesting period. The filing calls the awards that were eligible for payout on retirement terms "LTIP Awards." Stock options that were underwater at closing were excluded from this treatment.

The accelerated portion was or will be settled within the period set by each award agreement. The buyer became obligated to grant cash-based replacement awards for the forfeited portion of each LTIP Award, other than stock options. The 8-K does not estimate what those replacement awards will cost the buyer or Baxter.

The executive departure

Under Item 5.02, Chris Toth ceased to serve as Executive Vice President and Group President, Kidney Care, and as an executive officer of Baxter, effective as of the closing date. He became entitled to the same LTIP Award treatment for his outstanding and unvested awards.

What the filing leaves out

The 8-K does not state how Baxter will use the proceeds. It gives no revenue, profit or cash figures for the business that was sold, and no description of what Baxter keeps.

Who signed

Joel T. Grade, Executive Vice President, Chief Financial Officer and Interim Chief Accounting Officer, signed the 8-K for Baxter.

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