Baxter to buy Gambro for $4B

Healthcare products maker Baxter International Inc. said on Tuesday that it would buy privately held Swedish dialysis product company Gambro AB for about $4 billion to expand its kidney therapy portfolio.

Baxter, whose shares were down 1 percent, will finance the deal with debt and cash. The deal marks Baxter's biggest acquisition since Chief Executive Robert Parkinson took the helm in 2004.

Baxter manufactures kidney dialysis equipment, drug infusion pumps and blood therapy products. The Gambro acquisition will round out Baxter's renal business, which accounted for almost one-fifth of the company's 2011 revenue of $13.89 billion.

Gambro is one of the largest makers of equipment for hemodialysis, which is generally performed in a hospital or clinic. The dialysis from Baxter's machines is called peritoneal and can be performed at home.

Gambro's sales have been flat to weaker in recent years, undermined partly by capacity constraints, but Baxter executives voiced confidence during a conference call with analysts that the business can be turned around.

"This is a very large global market and...it's going to continue to grow over the long term," Parkinson told analysts.

"At the end of the day, this is an acquisition that is not dependent on any one pathway for value creation. It is not dependent on a major new product launch or technological advancement, and is not dependent on commercial assumptions that our overly optimistic. This is an acquisition that is dependent on execution," he said. "This is something we know we can do and do well."

He said the planned acquisition did not represent a change in the direction of the company, which also makes drug infusion pumps and blood therapy products.

Shares of Baxter were down 1.1 percent at $65.11 near midday on Tuesday on the New York Stock Exchange. The deal is expected to close in the first half of next year.

TOO PRICEY?

Some analysts said they were concerned by the price tag and that the company will scale back its share buyback program in order to acquire Gambro.

"I think the deal makes sense. I think it does fit well with their existing renal business and I think there probably are synergies, but at the same time it is a lot of cash they are paying for this thing. They are taking on a significant amount of debt," said Michael Matson, an analyst at Mizuho Securities USA.

The Gambro deal marks further consolidation in the kidney dialysis market, where Gambro and Baxter compete against companies including U.S.-based DaVita HealthCare Partners Inc. and Germany's Fresenius Medical Care AG & Co. KGaA .

Analyst Kristofer Liljeberg of Sweden's Carnegie investment bank said the Gambro deal would give Baxter the No. 2 clinical dialysis position, behind Fresenius.

"I think in the longer-term, the ambition is to try to challenge Fresenius," Liljeberg said.

However, he said, Gambro, which is owned by Swedish investment holding company Investor AB and its partly owned private equity company, EQT Corp., had been struggling in recent years with slow growth and price competition.

Liljeberg said the deal was a good one for family-owned Investor, which controls several of Sweden's top companies. Since they bought Gambro, Investor and EQT have sold off its clinics and a blood component business.

A GROWING MARKET

More than 2 million patients globally are on some form of dialysis, and that has been increasing more than 5 percent annually, in part because of the rising rates of diabetes and hypertension.

Excluding special items, Baxter expects the Gambro transaction to reduce earnings per diluted share by 10 to 15 cents in 2013 and be neutral or add modestly to them in 2014. The deal is expected to close in the first half of next year.

Excluding the impact of special items and estimated amortization of intangible assets, the company said the deal should not affect earnings in 2013 and add 20 to 25 cents a diluted share in 2014.

Baxter said it expected the deal to add to earnings per diluted share, excluding special items, after 2014.

The suburban Chicago company said it expected over five years to increase sales by 7 to 8 percent, excluding the impact of currency fluctuations, on a compound annual basis, with earnings per diluted share, excluding special items, rising by 8 to 10 percent.

"Companies like Baxter can unlock a fair amount of value when they find strategic use for their overseas cash," said Piper Jaffray analyst Matt Miksic.

Indeed, Baxter said it planned to finance the deal with cash overseas. Multinational companies that have large international sales often have difficulties moving that cash back to the United States where they can put it to use.

J.P. Morgan was Baxter's financial adviser for the deal.

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Last-minute postponement of federal trial involving Burge

Jon Burge arrives for sentencing in January 2011. He was convicted of lying under oath about police torture. (E. Jason Wambsgans, Chicago Tribune / December 3, 2012)

By Annie Sweeney




Tribune reporter

11:31 a.m. CST, December 3, 2012

A federal trial over allegations that former Chicago police Cmdr. Jon Burge and other detectives covered up information that would have exonerated a man who spent 26 years in prison for a murder he didn’t commit was postponed today at the last minute.

U.S. District Judge Elaine Bucklo made the surprise announcement at about 10:15 a.m. as a jury was about to be picked.

Bucklo said the trial was postponed until Dec. 17 “due to issues that need to be resolved.”

Over the weekend, attorneys for Burge and the four detectives asked the judge to hold settlement discussions with the lawyers on both sides of the case. Attorneys for Alton Logan opposed any delay in the trial.

The trial stemming from Logan’s lawsuit would mark the first time in two decades that Burge, the disgraced former police commander, will testify in court about one of the numerous civil lawsuits filed against him.

Though he is expected to plead the Fifth Amendment, he will testify by way of videoconferencing from a federal prison in North Carolina, where he is serving a 4 1/2-year  sentence for lying about torture and physical abuse by his crew of detectives.

Logan, though, isn’t alleging he was beaten into confessing to murder by Burge and his men, but rather that they concealed evidence, even from Cook County prosecutors, that would have exonerated him.

asweeney@tribune.com

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Nokia Siemens to sell optical networks unit

FRANKFURT (Reuters) - Mobile telecoms equipment joint venture Nokia Siemens Networks, which is focusing on its core business, is to sell its optical fiber unit to Marlin Equity Partners for an undisclosed sum.

Up to 1,900 employees, mainly in Germany and Portugal, will be transferred to the new company, NSN said on Monday.

The company, owned by Nokia and Siemens, has sold a number of product lines since it last year announced plans to divest non-core assets and cut 17,000 jobs, nearly a quarter of its total workforce.

Nordea Markets analyst Sami Sarkamies said he expected more divestments after the optical unit deal. This disposal was a small surprise, he said, because NSN needed some optical technology - where data is transmitted by pulses of light - for its main mobile broadband business.

The move may hint the company is preparing itself for further consolidation in the sector by cutting overlaps with other players, Sarkamies said.

The telecom equipment market is going through rough times with stiff competition. French Alcatel-Lucent is also cutting costs.

($1 = 0.7689 euro)

(Reporting by Harro ten Wold; Editing by Greg Mahlich and Dan Lalor)

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A-Rod needs hip surgery, will miss season's start

NASHVILLE, Tenn. (AP) — The New York Yankees say Alex Rodriguez will have surgery on his left hip and will miss the start of the season and possibly the entire first half.

Rodriguez has a torn labrum, bone impingement and a cyst, the team said Monday. The Yankees said he will need to follow a pre-surgery program over the next four-to-six weeks and the team anticipates he will be sidelined four-to-six months. That timetable projects to a return between the start of May and mid-July.

A-Rod had right hip surgery on March 9, 2009, and returned that May 8. The Yankees said this operation will be "similar but not identical."

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Palace says Duchess of Cambridge expecting a baby

LONDON (AP) — Get the nursery ready: Prince William and his wife Kate are expecting their first child.

St. James’s Palace announced the pregnancy Monday, saying that the Duchess of Cambridge — formerly known as Kate Middleton — has a severe form of morning sickness and is currently in a London hospital. William is at his wife’s side.

The palace said since the pregnancy is in its “very early stages,” the 30-year-old duchess is expected to stay in the hospital for several days and will require a period of rest afterward.

It would not say how far along she is, only that she has not yet reached the 12-week mark.

News of the pregnancy drew congratulations from across the world, with the hashtag “royalbaby” trending globally on Twitter.

Not only are the attractive young couple popular — with William’s easy common touch reminding many of his mother, the late Princess Diana — but their child is expected to play an important role in British national life for decades to come.

William is second in line to the throne after his father, Prince Charles, so the couple’s first child would normally eventually become a monarch.

In recent days, Middleton has kept up her royal appearances — recently playing field hockey with schoolchildren at her former school.

The confirmation of her pregnancy caps a jam-packed year of highs and lows for the young royals, who were married in a lavish ceremony at Westminster Abbey last year.

They have traveled the world extensively as part of Queen Elizabeth II’s Diamond Jubilee celebrations and weathered the embarrassment of a nude photos scandal, after a tabloid published topless images of the duchess.

Joe Little, managing editor of Majesty magazine, said the news bookended a year that saw the royal family riding high in popular esteem after celebrations of Queen Elizabeth II’s 60 years on the throne.

“We’re riding on a royal high at the moment at the end of the Diamond Jubilee year,” he said. “People enjoyed the royal romance last year and now there’s this. It’s just a good news story amid all the doom and gloom.”

Speculation about when the couple would start a family has been rife since their wedding.

William’s mother — the late Princess Diana — got pregnant just four months after her wedding in 1981. Diana reportedly suffered from morning sickness for months and complained of constant media attention.

“The whole world is watching my stomach,” Diana once said.

American tabloid speculation of the pregnancy has been rampant for months. One newspaper even cited anonymous sources talking about Kate’s hormone levels. Others have focused on the first signs of the royal bump.

The palace said the royal family was “delighted” by the news, while British Prime Minister David Cameron wrote on Twitter that the royals “will make wonderful parents.”

Whether boy or girl, the child will be next in line behind William in the line of succession to the throne, Cabinet Office officials have said.

Leaders of Britain and the 15 former colonies that have the monarch as their head of state agreed in 2011 to new rules which give females equal status with males in the order of succession.

Although none of the nations had legislated to make the change as of September 2012, the British Cabinet Office confirmed that this is now the de-facto rule.

On the couple’s recent tour of Malaysia, Singapore, the Solomon Islands and Tuvalu in September, William reportedly said he hoped he and Kate would have two children.

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Associated Press writers Jill Lawless and Paisley Dodds contributed to this report.

Entertainment News Headlines – Yahoo! News

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US flu season starts early, could be bad, CDC says

NEW YORK (AP) — Health officials say flu season is off to its earliest start in nearly 10 years — and it could be a bad one.

The primary strain circulating is one that tends to cause more severe illness, especially in the elderly.

But officials with the Centers for Disease Control and Prevention said the nation seems to be fairly well prepared. More than a third of Americans have been vaccinated, and the vaccine is well matched to the strains of flu so far.

Officials said Monday that suspected flu cases have jumped in five southern states — Alabama, Louisiana, Mississippi, Tennessee and Texas. An uptick in flu reports like this usually doesn't occur until after Christmas.

The last time a typical flu season started this early was the winter of 2003-04.

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Palace says Duchess of Cambridge expecting a baby

LONDON (AP) — The most widely anticipated pregnancy since Princess Diana's in 1981 is official: Prince William's wife, Kate, is pregnant.

St. James's Palace announced the pregnancy Monday, saying that the Duchess of Cambridge — formerly known as Kate Middleton — has a severe form of morning sickness and is currently in a London hospital. William is at his wife's side.

News of the pregnancy drew congratulations from across the world, with the hashtag "royalbaby" trending globally on Twitter.

The couple's first child will be third in line to take the throne — leapfrogging the gregarious Prince Harry and possibly setting up the first scenario in which a U.K. female heir could benefit from new gender rules about succession.

The palace would not say how far along the 30-year-old duchess is, only that she has not yet reached the 12-week mark. Palace officials said the duchess was hospitalized with hyperemesis gravidarum, a potentially dangerous type of morning sickness where vomiting is so severe no food or liquid can be kept down. They said she was expected to remain hospitalized for several days and would require a period of rest afterward.

"It's not unusual for pregnant women to get morning sickness, but when it gets to the point where you're dehydrated, losing weight or vomiting so much you begin to build up (toxic) products in your blood, that's a concern," said Dr. Kecia Gaither, director of maternal fetal medicine at Brookdale University and Medical Center in New York.

The condition is thought to affect about one in 50 pregnant women but Gaither said less than one percent of women with the condition need to be hospitalized.

The news came just days after the duchess, on a royal appearance, was playing field hockey with schoolchildren at her former school.

Not only are the attractive young couple popular — with William's easy common touch reminding many of his mother, the late Diana — but their child is expected to play an important role in British national life for decades to come.

William is second in line to the throne after his father, Prince Charles, so the couple's first child would normally become a monarch — eventually.

The confirmation of Kate's pregnancy caps a jam-packed year of highs and lows for the young royals, who were married in a lavish ceremony at Westminster Abbey last year.

They have traveled the world extensively as part of Queen Elizabeth II's Diamond Jubilee celebrations and weathered the embarrassment of a nude photos scandal, after a tabloid published topless images of the duchess.

Joe Little, managing editor of Majesty magazine, said the news bookended a year that saw the royal family riding high in popular esteem after celebrations of Queen Elizabeth II's 60 years on the throne.

"We're riding on a royal high at the moment at the end of the Diamond Jubilee year," he said. "People enjoyed the royal romance last year and now there's this. It's just a good news story amid all the doom and gloom."

Speculation about when the couple would start a family has been rife since their wedding.

William's mother Diana got pregnant just four months after her wedding in 1981. Diana also reportedly suffered from morning sickness for months and complained of constant media attention.

"The whole world is watching my stomach," Diana once said.

She gave birth to William in 1982 after 16 hours of labor. At his birth, William was given a baby tag marked 'Baby Wales' and a 41-gun salute was fired in Hyde Park and the Tower of London.

In September 1983, roughly a year after the birth of William, Buckingham Palace announced that Diana was pregnant for a second time. However, within a week, Diana suffered a miscarriage when on holiday at Balmoral, Scotland.

In 1984, she became pregnant again and gave birth to Harry.

American tabloid speculation of Kate's pregnancy has been rampant for months. One newspaper even cited anonymous sources talking about Kate's hormone levels. Others have focused on the first signs of the royal bump.

The palace said the royal family was "delighted" by the news. British Prime Minister David Cameron admitted he got a heads-up about the pregnancy, saying he found the news "quite difficult" to keep to himself and expressing his confidence the duo will make "absolutely brilliant parents."

The leaders of Britain and the 15 former colonies that have the monarch as their head of state agreed in 2011 to new rules which give females equal status with males in the order of succession.

Although none of the nations had legislated the change as of September, the British Cabinet Office confirmed that this is now the de-facto rule.

Those changes make Kate's pregnancy all the more significant for the royal family, according to Ingrid Seward, editor-in-chief of Majesty magazine.

"This is the first child who will be an heir to the throne whatever sex they are," she said. "It's a new beginning."

Graham Smith of anti-monarchy group Republic called Kate's pregnancy a "private, personal matter" for her and William, saying the flood of media coverage was disproportionate

"We've heard today that our future head of state is on the way. It's a pretty bizarre way of choosing someone for public office," he said.

On the couple's tour of Malaysia, Singapore, the Solomon Islands and Tuvalu in September, William reportedly said he hoped he and Kate would have two children.

___

Associated Press writers Jill Lawless, Paisley Dodds and AP Medical Writer Maria Cheng contributed to this report.

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Heat is on Groupon's Andrew Mason

In June 2011, Groupon Inc. Chief Executive Andrew Mason took the stage at a conference hosted by influential technology blog AllThingsD.

When co-executive editor Kara Swisher asked him whether an initial public offering was coming soon, he shot her what she later dubbed his "death stare."

The audience laughed and broke into applause.

The tone was decidedly more subdued last week, when Mason found himself at another tech industry confab, fielding questions from Business Insider's Henry Blodget, this time about whether Groupon's directors were going to fire him at their meeting the next day. AllThingsD had reported a day earlier, citing anonymous sources, that Groupon's board of directors was considering replacing Mason with a more experienced CEO to lead the Chicago-based daily deal company's turnaround.

The contrast between those two appearances underscores the swift and dramatic tumble of Mason's standing in tech and business circles within a few years. The young founder and CEO graced the cover of Forbes in 2010 and was named Ernst & Young's National Entrepreneur of the Year in the "emerging" category a year later.

Those accolades are a far cry from the cloud hanging over Mason, 32, and the company he launched four years ago. The leak to AllThingsD appeared to be deliberately timed to embarrass the executive, forcing him to field questions about his own competence at a scheduled appearance. This public hint of internal strife has fueled speculation around Mason's fate even as other public tech companies, such as Facebook and social game-maker Zynga, have also seen their stock prices drop since their IPOs.

Groupon's board met Thursday and took no action on the CEO's job, with company spokesman Paul Taaffe saying the board and management were "working together with their heads down to achieve Groupon's objectives."

Markets, however, seemed unconvinced. Groupon's beleaguered stock closed slightly higher Thursday but dropped 8.7 percent to $4.14 Friday. Shares debuted at $20 in November 2011.

Investors "want experience in leadership," said Raman Chadha, a clinical professor at DePaul University and co-founder of the Junto Institute for Entrepreneurial Leadership, a training program for startup founders. "And as a result, where Andrew's background was cool and sexy — and maybe even bordering on amusing — when Groupon was a pure startup, that's in the mindset of those of us who are observers and supporters … and fellow entrepreneurs. I think in the minds of the investor community and Wall Street, (it's different) because now the company has a lot more to lose. And if it's going to fall, it's going to fall really hard and really far."

For Chadha, Mason's unconventional pedigree as a music major-turned-startup-founder was part of the appealing, media-friendly story of Groupon's origin. The company was launched as recession-weary consumers were eager for deals, and it achieved rapid growth while earning a reputation for antics like decorating a conference room in the style of a fictional, possibly deranged tenant of Groupon's headquarters who had lived there before the startup moved into the offices.

The scrutiny of Groupon was tremendous given the "high-flying" nature of the company, said David Larcker, a corporate governance expert at the Stanford Graduate School of Business.

"You have a founder as CEO," he said. "He's the public face of the company. He has set the culture. All of that stuff."

That culture, driven in large part by Mason, turned from a lovable quirk to a major liability as the company ran into controversy over its poorly received Super Bowl ads in February 2011 and a series of missteps in the run-up to its IPO. Then, within months of its public debut, it disclosed an accounting flaw that forced it to restate financial results.

The larger question surrounding Groupon is the long-term viability of its basic business model. The company has been expanding offerings beyond its core daily deals, which have seen growth rates tail off. It's also dealing with a recession in the key European market as well as continued competition in the U.S.

But the biggest challenge facing Mason now is probably his own performance, or rather the perception that he isn't up to the task of running the global, publicly traded business worth billions that he founded but that now needs a turnaround. The stock is down 80 percent from its IPO price.

"It's an oft-told, oft-expected story that the genius entrepreneur steps aside when he or she succeeds at building a company big enough to need an experienced CEO," said Erik Gordon, a business professor at the University of Michigan.

The example Gordon and others cite is Google, which flourished after its co-founders Larry Page and Sergey Brin made way for a more seasoned executive in Eric Schmidt.

"The Google guys did it, and the results were spectacular," Gordon said.

Chadha said many startups tend to become more corporate in outlook, and less quirky, as they grow, because they bring in experienced executives from large companies that may have difficulty adapting to an entrepreneurial culture or reject it outright as not professional enough.

"I think that's where Google is very different," Chadha said. "(The company) sought out entrepreneurial, startup types — people that became part of their management team." That free-form element of Google's culture comes out in such things as the Google doodles — the offbeat tributes to notable anniversaries or famous people that pop up on the main search page.

Mason has acknowledged areas where Groupon needs to improve and has hired senior executives with experience at more mature tech companies. That hasn't always worked either. Margo Georgiadis, who came from Google as chief operating officer, returned to that company after five months.

Whether there's still room for Mason on the top management team remains to be seen. He was direct in his interview last week with Blodget, offering a minimum of jokes as he focused on discussing the job he and others at Groupon must accomplish.

"I care far more about the success of the business than I care about my role as CEO," he said.

A year ago, when he spoke to author Frank Sennett for his book "Groupon's Biggest Deal Ever," Mason was unapologetic about his management style.

"You only live once, and all I'm doing is being myself," he told Sennett. "I think a normal CEO is trying to appear in some way that's not actually them. That's probably not what they're like."

In the same book, former President and Chief Operating Officer Rob Solomon offered this blunt assessment of his ex-boss: "Andrew at thirty-five and forty is going to hate Andrew at twenty-nine and thirty; I guarantee it."

Melissa Harris and Bloomberg News contributed.

wawong@tribune.com

Twitter @VelocityWong

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2nd quarter: Bears 7, Seahawks 0

Jay Cutler may not be the only reason the Chicago Bears win or lose a game, but the veteran quarterback certainly figured to be a key factor in Sunday’s NFC matchup against the Seattle Seahawks at Soldier Field.

Seattle tied the game on a 4-yard touchdown run by Marshawn Lynch with 2:15 left until the half. The nine-play, 94-yard scoring drive included a 49-yard pass from Russell Wilson to Golden Tate.

Cutler, who entered the game with a 13-2 record in his last 15 starts, was hot early. Lynch fumbled with 11:59 left in the first period when Brian Urlacher forced the ball away and Kelvin Hayden recovered at the Seahawks' 49. The Bears converted the turnover into a 12-yard touchdown pass from Cutler to Earl Bennett with 8:33 left.

Bennett was hit low by Brandon Browner inside the 5-yard line and flipped into the end zone. The Bears led 7-0 with Robbie Gould's extra point.

Since Week 16 of the 2009 season, the Bears had compiled a 27-10 record (.730) in games Cutler has started. He had completed 659 of 1,103 passes (59.7 percent) for 8,144 yards, 57 touchdowns and 35 interceptions for a passer rating of 86.6.

Cutler says he cares only about winning.

“Eight and three, that’s the only thing,” Cutler said of the Bears’ record this season entering the game. “I couldn’t tell you one stat. (Brandon Marshall) obviously is well-schooled on his stats. Not only his stats, but every other receiver in the league, so he’s got it down pat. That’s receivers for you. The good ones are all like that; they want the ball, and they want the ball a lot."

The Bears were hoping their patched-together offensive line could protect Cutler. With right guard Lance Louis out for the season with a knee injury, tackle Gabe Carimi has been plugged in at guard. Left tackle J’Marcus Webb knew he would have his hands full trying to slow down Seattle’s defensive end Chris Clemons.

fmitchell@tribune.com

Twitter@kicker34

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Zynga shares slide after privileged status with Facebook ends

(Reuters) - Shares of gaming company Zynga Inc fell as much as 10 percent, a day after the "Farmville" creator reached an agreement with Facebook Inc that reduces its dependence on the social networking giant.

The companies reported in regulatory filings on Thursday that they have reached an agreement to amend a 2010 deal that was widely seen as giving Zynga privileged status on the world's No.1 social network.

Zynga gets a freer hand to operate a standalone gaming website, but gives up its ability to promote its site on Facebook and to draw from the thriving social network of about 1 billion users.

"Although Zynga investors have reacted negatively to Thursday's announcements so far, we view them as a long-term positive for both companies," Wedbush Securities analyst Michael Pachter said in a note to clients.

"Zynga now has an advantage to offer more payment options which could result in additional subscribers who are not Facebook users," he said, maintaining his "outperform" rating and price target of $4 on the stock.

Both internet companies have been trying to reduce their interdependence, with Zynga starting up its own Zynga.com platform, and Facebook wooing other games developers.

In recent quarters, fees from Zynga contributed 15 percent of Facebook's revenue, while Zynga relies on Facebook for roughly 80 percent of its revenue.

Francisco-based Zynga's shares were down 7 percent at $2.44 in morning trading on the New York Stock Exchange on Friday.

Facebook shares were down more than 1 percent at $26.98.

(Reporting By Aurindom Mukherjee in Bangalore; Editing by Don Sebastian)

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