Baxter capable of $1 bln in deals/yr

By Sam Cage

NEW YORK (Reuters) - Baxter International Inc (BAX.N: Quote, Profile, Research, Stock Buzz) has the capacity to make acquisitions worth $1 billion every year using its own cash flow, its chief executive told the Reuters Health Summit in New York.

Baxter, which makes infusion pumps, hospital products and kidney dialysis equipment, has no plans for a major acquisition and targets individual deals of up to several hundred million dollars, its chief executive, Bob Parkinson, said on Thursday.

"If you look at our projected cash flow over the next five years, we should have a capacity to handle, certainly, a billion dollars a year in acquisitions should we find opportunities that meet our very rigorous financial return thresholds," Parkinson said.

"We're trying to be a bit more disciplined and a bit more pragmatic," he said. "And so we will do acquisitions, but I would characterize them in the range of several hundred million dollars in terms of financial order of magnitude, and they also would not be in totally new areas."

The company will shun mega-deals, Parkinson said, as it believes far more of these are unsuccessful than successful.

Baxter currently posts about 56 percent of its total sales outside the United States, and that proportion should rise toward 60 percent as the company expands its operations in emerging markets, especially China, Parkinson said.

"It'll be higher than 56, but I don't know where exactly it will be," he said. "It's not going to move dramatically ..." He added that it would not neglect its U.S. operations.

In China, Baxter's priorities are expanding its existing business rather than making acquisitions.

The company may also be able to outperform its "base case" forecast of 7 percent annual growth in sales and 12 percent in net profit through 2011.

"I can tell you the management of the company is certainly committed and aspires to do better than that, and we have some exciting program in place that may very well enable us to do that," Parkinson said.

Baxter shares fell 1 percent to $57.87 on the New York Stock Exchange.

(Additional reporting by Bill Berkrot; Editing by Jeffrey Benkoe)