Baxter to split, creating two separate health care companies

News that USA-based Baxter International (NYSE: BAX) plans to create two separate, independent global health care companies caused the firm’s shares to rise 5% and closing $72.81 yesterday.

One of these spin-offs will be focused on developing and marketing innovative biopharmaceuticals and the other on life-saving medical products. Both will be global leaders in their respective markets, said Baxter. The split is expected to be completed by the middle of next year and to be a tax-free distribution to shareholders.

The spinoff is expected to be a tax-free distribution to shareholders and should conclude in mid-2015, depending on regulatory and other approvals, including the final approval from Baxter's board of directors. The move follows a similar decision that was finalized at the end of 2012 of Abbott Laboratories to spin out its research-based pharma business as AbbVie (NYSE: ABBV; The Pharma Letters passim). Pfizer (NYSE: OFE), currently the world’s largets drugmaker by sales, has also spun out non-core businesses and is being urged to split further.