The date of Baxter International Inc.’s much-anticipated spinoff of its Irvine-based cardiovascular unit, Edwards Lifesciences Corp., has been moved up from mid-year to April 3.
“We’re very excited. We’re going to go and ring the bell on the opening day of the New York Stock Exchange,” said Michael A. Mussallem, Edwards’ chairman and CEO.
Mussallem said the accelerated rollout was a matter of procedural matters falling in place sooner than the company expected,he said things are three months ahead of schedule,and that it was not an attempt to take advantage of what has suddenly become a more favorable market for biomedical stocks.
But Mussallem doesn’t dispute the timing looks good, at least as of last week.
“We didn’t plan it that way but what a time to be publicly traded,” said Mussallem. “The broad bio-medical community that exists in Orange County and beyond is in a good environment right now.”
The public debut will come amid a recent rise in the Nasdaq Biotech Index, which has doubled in the last three months. While Edwards is not a pure biotech play, it could get a bounce from the renewed interest in the sector, industry observers say.
Optimism for Launch
The opening price has not yet been established for the 58 million shares that will be outstanding, but observers believe that a billion-dollar plus market cap is likely. And the company reported $905 million in sales in 1999. Those kinds of numbers make Edwards a challenger to Beckman Coulter Inc. for the title of biggest medical instrument company in Orange County. Beckman has trailing 12-month revenue of $1.8 billion and had a recent market cap of $1.5 billion.
“That’s one spin-off that will certainly have an impact on the community,” Ed Doyle, a co-founder of a biotech startup, Irvine-based BioMEMS, said of Edwards. “The mere fact is that Baxter has done extremely well for institutional investors and now you have another billion-dollar revenue stream going online.”
Barbara Lubash, one of the co-founders of Irvine-based Versant Ventures, a new $275 million fund to invest in health-related industries, said Edwards should provide a lot of synergy for the industry.
“When there are corporate headquarters in the county, that generates a pool of management talent, people coming and going and potential partnerships with the local companies,” she said. “It attracts a talent pool whose focus is medical technology in this area.”
The company is named after Miles “Lowell” Edwards, who began working out of a shop in Santa Ana in the late 1950s and is credited with co-inventing the first commercially available heart valve. Edwards, who died in the 1980s, is considered one of the founders of Orange County’s widespread biomedical industry. His company eventually became American Edwards Laboratories, which was acquired in 1985 by Deerfield, Illinois-based Baxter.
Nowadays, Edwards Lifesciences designs, develops, manufactures and markets a comprehensive line of products and services to treat late-stage cardiovascular disease. It also has product lines comprised mostly of pharmaceuticals and select distributed products. In 1999, it reported net income of $82 million.
Baxter is spinning off Edwards Lifesciences, according to its proxy, “because its management believes that the combined value of two separate companies will be greater than the value of Baxter as a whole today.”
After the rollout, Edwards Lifesciences will have 58 million shares outstanding, all distributed among Baxter shareholders, who will receive one Edwards share for each five shares of Baxter that they own. The company’s ticker symbol is expected to be “EW.”
Mussallem, 47, joined Baxter in 1979 and has been the Group VP of Baxter’s CardioVascular business since 1994 and Group VP of Baxter’s biopharmaceutical business since 1998.
Blue Chip Board
Edwards has a blue chip seven-member board of directors, six of whom have been selected: Vernon R. Loucks Jr., chairman of Baxter’s board from 1987-99, and its former CEO, Philip M. Neal, president/CEO/director of Avery Dennison Corp.; David E.I. Pyott, president/CEO of Irvine-based Allergan Inc.; Mike R. Bowlin, chairman/CEO of Atlantic Richfield Co.; and Victoria R. Fash, president/ CEO of IMS Health.
Edwards Lifesciences’ operating management team will essentially remain the same, including Stuart L. Foster as corporate VP for Global Operations and Anita B. Bessler, as Corporate VP for Cardiac Surgery. In addition, Edwards recently added Bruce Bentcover as CFO and Bruce Garren as general counsel. n
