Baxter’s Spinoff

Baxter International (BAX) is splitting off its BioSciences division into a new company called Baxalta. Shares of Baxalta will be given as a tax-free dividend, in the ratio of one to one, to BAX holders on record on June 17, 2015. That means, if you want to receive the Baxalta dividend, you need to buy the stock this week (on or before June 12).

The Baxalta Spinoff

In its recent filing with the SEC, Baxter provides:

"This information statement is being furnished in connection with the distribution by Baxter International Inc. (Baxter) to its shareholders of approximately 80.5% of the outstanding shares of common stock of Baxalta Incorporated (Baxalta), a wholly owned subsidiary of Baxter that will hold directly or indirectly the assets and liabilities associated with Baxter’s biopharmaceuticals business. To implement the distribution, Baxter will distribute approximately 80.5% of the shares of Baxalta common stock on a pro rata basis to the Baxter shareholders in a manner that is intended to be tax-free for U.S. federal income tax purposes."

"As a result of the separation, each Baxter shareholder will receive one share of Baxalta common stock for every Baxter share of common stock held on June 17, 2015, the record date for the distribution."

TalkMarkets contributors Trevor Lowenthal, Paul Price and I have been reviewing Baxter and its upcoming spinoff of Baxalta. We believe that the spinoff will unleash value from the Baxalta BioScience division of the company and that the sum of the BAX parts will prove to be greater than the whole. Baxalta should benefit from growing market penetration for Advate, the number one selling therapy in its hemophilia franchise, along with the approval of important new products. This should enhance long-term value for current BAX shareholders as Baxalta’s new products hit the market and as the independent company gets priced more in line with its growth prospects. 

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Comments

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Wendell Brown 3 years ago Member's comment

I'm not clear why if you have to be of record by June 17 they have to be bought by June 12? Does getting 'on record' take that long?

Dr. Paul Price 3 years ago Contributor's comment

The weekend adds two days. Stocks have a three-day settlement.

Buy Monday, June 15th and you won't be holder of record until June 18th.

Wendell Brown 3 years ago Member's comment

Thanks very much Dr. Price! I wasn't sure how the days were counted, ie if the 17th was the third day. But I did manage to get my order in today.