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KENDALL IS GETTING McGAW WITH 1984 PARENTERAL SOLUTION SALES OF OVER $165 MIL.: JUSTICE DEPT. CONSENT WITH AMERICAN DISCLOSES SIZES OF DIVESTED BUSINESSES

Executive Summary

Colgate Palmolive's Kendall Div. is getting a parenteral solution business with over $165 mil. in 1984 sales in the acquisition of American McGaw, according to a Justice Dept. final divestiture order related to Baxter's acquisition of American Hospital Supply Corp. Justice said that Baxter was No. 1 in the U.S. market in 1984 with 50.5% ($505.6 mil.) of sales in the parenteral solution market. American McGaw was third with sales of "approximately $166.4 mil, accounting for approximately 16.6% of the total sales of parenteral solutions in the United States." Justice noted that McGaw is also the third largest manufacturer (behind Abbott and Baxter) of intravenous fluid administration sets. McGaw's set business, Justice said, amounted to $61 mil. in 1984 sales, or approximately 13.9% of total sales in the U.S. At about $230 mil. total, McGaw will make Kendall a billion dollar health care company based on Kendall's sales of $803 mil. in 1984. The final order is a pro forma legal proceeding described by Justice as intended "to ensure" that Baxter and AHSC complete a group of divestitures required by Justice to satisfy antitrust provisions. Previously, Baxter/AHSC had agreed to sell McGaw to Kendall, AHSC's Haemonetics on a management team. The final judgment notes that on Nov. 15 AHSC signed an agreement with Ansell, Inc, a subsidiary of Dunlop Olympic, for the sale of its surgical glove manufacturing operations. The final judgment also outlines a series of ancillary agreements negotiated by Kendall "to ensure its competitive viability." According to the document, these agreements "provide, among other things, that Kendall will have access to American's distribution centers for about one year; that Kendall will receive the right to use certain significant technology from Baxter, not presently available to American, relating to the packaging of parenteral solutions in flexible plastic bags; that Baxter will not actively solicit, for a limited period of time not to exceed 18 months, current customers under contract with McGaw; and that American will buy a fixed amount of certain parenteral solutions from McGaw for the next five years." Another ancilliary agreement provides for an exchange of rights to electronic flow control device products between AHSC and Kendall. The contract "provides for the assignment to Kendall of American's rights to distribute" a flow control device made by IVENT. In addition, Kendall receives a three-year nonexclusive right to distribute (at a firm purchase price) three other flow control devices: the Accupro pump, the "Flo-Guard" pump, currently manufactured by Baxter, and the Anatros controller, currently manufactured by Anatros Corp., now a subsidiary of Kendall. Anatros Corp. is being transferred to American' as part of the contract, Justice noted. On the same day as Justice released the consent order, shareholders of both Baxter and American voted to approve the merger. Two-thirds of Baxter shareholders voted in favor of the acquisition with 80% of American voters favoring the deal. Baxter stockholders also approved a related proposal to increase its preferred stock as a financing move.
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