RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:TODAY’S NUMBERSI too appreciate your cordial and intelligent response. CG does in fact have a deal in place for $3.5B to buy Vantive from Baxter. However, it is contingent on final due dilligence/inspections before CG writes the check and receives the keys. It's akin to somebody signing a contract to buy your house for X amount. That person then has until 'closing' to check your furnace, roof, foundation etc. If that person finds that your roof is leaking and needs to be replaced, they then have 2 choices, coming to agreement with you on a lower price to compensate for the leaky roof, or they can completely walk away from the deal. In both situations, it's a mechanism that allows the buyer to have protection from the unknown and/or undisclosed.
Clearly none of us actually knows if CG is using this leverage on Baxter, but we do know that CG is one of the largest PE firms in the world and that PE firms are known as the shrewdest business people. CG definitely wouldn't want to harm their reputation by trying to renegotiate over ticky tacky issues, but this flood at the IV fluid factory exposes 2 major concerns CG might have with the price of this deal.
Firstly, Baxter will be the contract manufacturer for Vantives Dialysis fluid bags for the foreseable future. Baxter's incompetence at that factory will make CG wonder about how reliable Baxter will be in the future, to provide said dialysis fluids for Vantive to resell to it's customers.
Secondly, When CG and Baxter negotiated a price for Vantive, an aproximate timeline for the completion of the Tigris trial surely was discussed and disclosed. The flooding of that IV factory has delayed that by a significant amount of time and we still aren't certain that the IV fluid shortage is completely behind us.
So CG basically has 3 options, they can ask to delay the closing date, they can ask to lower the purchase price to compensate for these issues, or they can completely walk away from the deal and then fight in court to not have to pay the $200mm break up fee.
Baxter definitely doesn't want to delay the closing date by much and they most definitely don't want to see CG walk away, so that just leaves adjusting the closing price. I personally am of the opinion that Baxter would be willing to lower the final price by $50-100mm just to finally get the deal done. Their stock is bouncing off of a 12 year low and their CEO looks out his window everyday and sees shareholders and even employees screaming and waving pitchforks.
Lastly I will say, that if the final price is lowered, there won't an announcement or press release about it. The adjustment in price will happen under the term, "closing adjustments." This is a broad term used in M&A to cover everything from inventory at closing to money to "repair the roof."