Form SC 13D BAXTER INTERNATIONAL Filed by: Third Point LLC

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 13D

Under the Securities Exchange Act of 1934

(Amendment No.     )*

 

 

Baxter International Inc.

(Name of Issuer)

Common stock, par value $1.00 per share

(Title of Class of Securities)

071813109

(CUSIP Number)

Joshua L. Targoff

Third Point LLC

390 Park Avenue, 19th Floor

New York, NY 10022

(212) 715-3880

(Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications)

August 4, 2015

(Date of Event which Requires Filing of this Statement)

 

 

If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box.  ¨

 

 

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7 for other parties to whom copies are to be sent.

 

 

 

*	The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 

 

 

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CUSIP No. 071813109

 

1		NAME OF REPORTING PERSONS   Third Point LLC
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3		SEC USE ONLY
4		SOURCE OF FUNDS   AF
5		CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)    ¨
6		CITIZENSHIP OR PLACE OF ORGANIZATION   Delaware
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH				7		SOLE VOTING POWER   0
				8		SHARED VOTING POWER   37,925,000 (see Item 5)
				9		SOLE DISPOSITIVE POWER   0
				10		SHARED DISPOSITIVE POWER   37,925,000 (see Item 5)
11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   37,925,000 (see Item 5)
12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   7.0%
14		TYPE OF REPORTING PERSON   OO

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CUSIP No. 071813109

 

1		NAME OF REPORTING PERSONS   Daniel S. Loeb
2		CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a)  ¨        (b)  x
3		SEC USE ONLY
4		SOURCE OF FUNDS   AF
5		CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)    ¨
6		CITIZENSHIP OR PLACE OF ORGANIZATION   United States
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH				7		SOLE VOTING POWER   0
				8		SHARED VOTING POWER   37,925,000 (see Item 5)
				9		SOLE DISPOSITIVE POWER   0
				10		SHARED DISPOSITIVE POWER   37,925,000 (see Item 5)
11		AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON   37,925,000 (see Item 5)
12		CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES    ¨
13		PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)   7.0%
14		TYPE OF REPORTING PERSON   IN

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Item 1. Security and Issuer

This Schedule 13D relates to the common stock, par value $1.00 per share (the “Common Stock”) of Baxter International Inc., a Delaware corporation (the “Issuer”). The address of the Issuer’s principal executive offices is One Baxter Parkway, Deerfield, Illinois 60015.

Item 2. Identity and Background

(a) This Schedule 13D is being filed by Third Point LLC, a Delaware limited liability company (the “Management Company”), and Daniel S. Loeb (“Mr. Loeb” and, together with the Management Company, the “Reporting Persons”).

(b) The principal business address of the Reporting Persons is 390 Park Avenue, 19th Floor, New York, New York 10022.

(c) The principal business of the Management Company is to serve as investment manager or adviser to a variety of hedge funds and managed accounts (such funds and accounts, collectively, the “Funds”), and to control the investing and trading in securities of the Funds. The principal occupation of Mr. Loeb is serving as Chief Executive Officer of the Management Company.

(d) (e) During the last five years, none of the Reporting Persons (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree, or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

(f) Mr. Loeb is a citizen of the United States of America.

Item 3. Source and Amount of Funds or Other Consideration

The Funds expended an aggregate of approximately $1,517,014,538 of their own investment capital to acquire the 37,925,000 shares of Common Stock held by them.

The Reporting Persons and Funds may effect purchases of shares of Common Stock through margin accounts maintained for them with brokers, which extend margin credit as and when required to open or carry positions in their margin accounts, subject to applicable federal margin regulations, stock exchange rules and such firms’ credit policies. Positions in shares of Common Stock may be held in margin accounts and may be pledged as collateral security for the repayment of debit balances in such accounts. Such margin accounts may from time to time have debit balances. In addition, since other securities may be held in such margin accounts, it may not be possible to determine the amounts, if any, of margin used to purchase shares of Common Stock.

Item 4. Purpose of Transaction

On July 2, 2015, the Reporting Persons and the Funds filed with the Federal Trade Commission Notifications pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules promulgated thereunder (collectively, the “HSR Act”) related to future acquisitions of additional shares of the Issuer’s Common Stock. Notice of such filing was delivered on the same day to the Issuer, which subsequently confirmed receipt thereof. The waiting periods under the HSR Act expired on August 3, 2015.

On July 30, 2015 representatives of the Reporting Persons met with the Chief Executive Officer of the Issuer and other members of management. On August 4, 2015 representatives of the Reporting Persons met with Thomas T. Stallkamp, the Issuer’s lead director.

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On August 5, 2015 the Reporting Persons delivered to the Issuer a letter, a copy of which is attached as Exhibit 3 hereto and incorporated herein in its entirety.

The Reporting Persons originally acquired their shares of Common Stock subject to this Schedule 13D for investment purposes. In addition to discussions with the Issuer’s Board of Directors (the “Board”) and management team, the Reporting Persons may also engage in a dialogue and other communications regarding the Issuer with other stockholders of the Issuer, knowledgeable industry or market observers or other persons. Any such discussions may relate to, among other things, the Issuer’s operating strategies, performance, management succession plans and corporate governance matters.

The Reporting Persons may also take other steps to increase shareholder value as well as pursue other plans or proposals that relate to, or would result in, any of the matters set forth in subparagraphs (a)-(j) of Item 4 of Schedule 13D, excluding (i) acquiring a control stake in the Issuer’s shares of common stock, or grouping with any other party or parties to do so, (ii) engaging in an extraordinary transaction, such as a merger, with the Issuer, or acquiring a material amount of the Issuer’s assets, or grouping with any other party or parties to do either, or (iii) seeking to exert negative control over the important corporate actions of the Issuer, or grouping with any other party or parties to do so, although the Reporting Persons may seek to influence such actions through customary means including presenting its views for consideration to the Issuer, shareholders and other interested parties, privately or publicly, and, if necessary, through the exercise of its shareholder rights including the right to propose new directors for the Issuer’s Board.

The Reporting Persons intend to review their investment in the Issuer’s shares of Common Stock on a continuing basis. Depending on various factors including, without limitation, the Issuer’s financial position and investment strategy, the price levels of the shares, conditions in the securities markets and general economic and industry conditions, the Reporting Persons may in the future take such actions with respect to their investment in the Issuer as they deem appropriate including, without limitation, purchasing additional shares of Common Stock (but without (i) acquiring a control stake in the Issuer’s shares of common stock, or (ii) grouping with any other party or parties to do so), or selling some or all of their shares of Common Stock.

Item 5. Interest in Securities of the Issuer

(a) As of 9:30 a.m., New York City time, on the date of this Schedule 13D, the Reporting Persons beneficially own an aggregate of 37,925,000 shares of Common Stock held by the Funds (the “Shares”). The Shares represent 7.0% of the Issuer’s Common Stock outstanding. Percentages of the Common Stock outstanding reported in this Schedule 13D are calculated based upon the 544,254,211 shares of Common Stock outstanding as of April 30, 2015, as reported in the Issuer’s Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2015, filed by the Issuer with the Securities and Exchange Commission on May 6, 2015.

(b) Each of the Reporting Persons shares voting and dispositive power over the shares of Common Stock held directly by the Funds.

(c) Set forth on Schedule I hereto are all transactions in the securities of the Issuer effected during the past sixty days by the Reporting Persons, inclusive of any transactions effected through 9:30 a.m., New York City time, on August 5, 2015.

(d) Other than the Funds that directly hold the securities of the Issuer, and except as set forth in this Item 5, no other person is known to have the right to receive, or the power to direct the receipt of, dividends from or proceeds from the sale, of the Shares.

(e) Not applicable.

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Item 6. Contracts, Arrangements, Understandings or Relationships With Respect to Securities of the Issuer.

Pursuant to Rule 13d-1(k) promulgated under the Exchange Act, the Reporting Persons have entered into a Joint Filing Agreement, a copy of which is filed with this Schedule 13D as Exhibit 1, with respect to the joint filing of this Schedule 13D and any amendment or amendments thereto.

The Funds may, from time to time, enter into and dispose of cash-settled equity swap, stock-settled equity swap, option or other derivative transactions with one or more counterparties that are based upon the value of shares of Common Stock, which transactions may be significant in amount. The profit, loss and/or return on such contracts may be wholly or partially dependent on the market value of the shares of Common Stock.

Certain of the Funds have entered into swaps with respect to the Common Stock. Under the terms of the swaps, (i) the relevant Fund will be obligated to pay to the counterparty any negative price performance of the specified notional number of shares of Common Stock subject to the swaps as of the expiration date of such swaps, plus interest rates set forth in the applicable contracts, and (ii) the counterparty will be obligated to pay the relevant Fund any positive price performance of the specified notional number of shares of Common Stock subject to the swaps as of the expiration date of the swaps. Any dividends received by the counterparty on such notional Shares during the term of the swaps will be paid to the relevant Funds. The swaps do not give the Reporting Persons direct or indirect voting, investment or dispositive control over any securities of the Issuer and do not require the counterparty thereto to acquire, hold, vote or dispose of any securities of the Issuer. Accordingly, the Reporting Persons disclaim any beneficial ownership of any shares that may be referenced in the swap contracts or shares or other securities or financial instruments that may be held from time to time by any counterparty to the contracts. The number of shares of Common Stock specified in such swaps as of 9:30 a.m. New York City time on the date hereof is 15,925,000.

As of 9:30 a.m. New York City time on the date hereof, the Funds have sold put options referencing an aggregate of 4,500,000 shares of Common Stock at an exercise price of $37.50 per share, which expire on November 20, 2015. As of 9:30 a.m. New York City time on the date hereof, the Funds have purchased call options referencing an aggregate of 8,500,000 shares of Common Stock at an exercise price of $39.00 per Share, which expire on August 21, 2015.

Other than as described herein, there are no contracts, arrangements, understandings or relationships (legal or otherwise) between the Reporting Persons and any other person with respect to the securities of the Issuer.

Item 7. Material to be Filed as Exhibits

 

Exhibit Number		Description of Exhibits
1		Joint Filing Agreement, dated as of August 5, 2015.
2		Power of Attorney granted by Daniel S. Loeb in favor of James P. Gallagher, William Song, and Joshua L. Targoff, dated February 9, 2011, was previously filed with the SEC on February 11, 2011 as an exhibit to Amendment No. 99.2 to Schedule 13G filed by Third Point LLC and Daniel S. Loeb with respect to Citadel Broadcasting Corporation and is incorporated herein by reference.
3		Letter to the Issuer, dated August 5, 2015.

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SIGNATURE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

 

				THIRD POINT LLC
Date: August 5, 2015
				By:		/s/ William Song
						Name:		William Song
						Title:		Attorney-in-Fact

 

				DANIEL S. LOEB
Date: August 5, 2015
				By:		/s/ William Song
						Name:		William Song
						Title:		Attorney-in-Fact

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SCHEDULE I

This Schedule sets forth information with respect to each purchase and sale of Shares which was effectuated by a Reporting Person during the past sixty days, inclusive of any transactions effected through 9:30 a.m., New York City time, on August 5, 2015. Unless otherwise indicated, all transactions were effectuated in the open market through a broker.

 

Date of Transaction		Number of Shares Purchased (Sold)				Price per Share ($)
6/17/2015			205,000				68.29
6/17/2015			500,000				68.25
6/18/2015			921,200				69.08
6/18/2015			600,000				69.35
6/18/2015			5,000				68.57
6/19/2015			100,000				69.69
6/19/2015			218,800				69.44
6/22/2015			100,000				70.26
6/22/2015			100,000				70.23
6/22/2015			225,000				70.12
6/23/2015			200,000				70.06
6/24/2015			300,000				71.75
6/24/2015			300,000				71.72
6/25/2015			50,000				71.69
6/25/2015			125,000				71.95
7/1/20151			900,600				37.99
7/6/2015			274,400				37.94
7/9/2015			100,000				37.00
7/14/2015			75,000				37.68
7/15/2015			250,000				37.70
7/16/2015			350,000				37.75
7/17/2015			150,000				37.75
7/20/2015			75,000				37.55
7/20/2015			250,000				37.53
7/20/2015			(1,200,000	)			37.50
7/20/2015			200,000				37.50
7/21/2015			10,000				37.75
7/21/2015			225,000				37.78
7/21/2015			500,000				37.77
7/21/2015			(850,000	)			37.60
7/21/2015			200,000				37.80
7/22/2015			500,000				37.71
7/22/2015			50,000				37.71
7/23/2015			200,000				37.99
7/23/2015			100,000				37.97
7/23/2015			150,000				38.00

 

1	Trade represents the “when-issued” shares described in the table below becoming listed shares.

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Date of Transaction		Number of Shares Purchased (Sold)				Price per Share ($)
7/23/2015			600,000				37.99
7/24/2015			290,000				37.70
8/4/2015			1,000,000				40.50
8/4/2015			2,000,000				40.50
8/4/2015			2,000,000				40.50
8/4/2015			1,575,000				40.49
8/4/2015			1,000,000				40.47
8/4/2015			2,000,000				40.49
8/4/2015			2,000,000				40.49
8/4/2015			3,000,000				40.42
8/4/2015			2,000,000				40.49
8/4/2015			4,000,000				40.50
8/4/2015			2,000,000				40.48
8/4/2015			2,000,000				40.49
8/4/2015			1,000,000				40.50
8/4/2015			2,000,000				40.47
8/4/2015			3,000,000				40.50

When-Issued Market Trades

 

Date of Transaction		Number of Shares Purchased (Sold)				Price per Share ($)
6/18/2015			75,000				36.61
6/19/2015			100,000				37.75
6/22/2015			6,150				38.27
6/22/2015			25,000				38.23
6/22/2015			18,850				38.23
6/22/2015			25,000				38.29
6/23/2015			160,000				38.16
6/24/2015			25,000				38.50
6/24/2015			42,000				38.53
6/25/2015			420,000				39.00
6/25/2015			3,600				38.97

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INDEX TO EXHIBITS

 

Exhibit Number		Description of Exhibits
1		Joint Filing Agreement, dated as of August 5, 2015
2		Power of Attorney granted by Daniel S. Loeb in favor of James P. Gallagher, William Song, and Joshua L. Targoff, dated February 9, 2011, was previously filed with the SEC on February 11, 2011 as an exhibit to Amendment No. 99.2 to Schedule 13G filed by Third Point LLC and Daniel S. Loeb with respect to Citadel Broadcasting Corporation and is incorporated herein by reference.
3		Letter to the Issuer, dated August 5, 2015.

EXHIBIT 1

JOINT FILING AGREEMENT

PURSUANT TO RULE 13d-1(k)

The undersigned acknowledge and agree that the foregoing statement on Schedule 13D is filed on behalf of each of the undersigned and that all subsequent amendments to this statement on Schedule 13D may be filed on behalf of each of the undersigned without the necessity of filing additional joint filing agreements. The undersigned acknowledge that each shall be responsible for the timely filing of such amendments, and for the completeness and accuracy of the information concerning him or it contained herein or therein, but shall not be responsible for the completeness and accuracy of the information concerning the others, except to the extent that he or it knows or has reason to believe that such information is inaccurate.

 

				THIRD POINT LLC
Date: August 5, 2015
				By:		/s/ William Song
						Name:		William Song
						Title:		Attorney-in-Fact

 

				DANIEL S. LOEB
Date: August 5, 2015
				By:		/s/ William Song
						Name:		William Song
						Title:		Attorney-in-Fact

EXHIBIT 3

 

		Third Point LLC 390 Park Avenue New York, NY 10022 Tel 212 715 3880

Mr. Robert L. Parkinson, Jr.

Mr. Thomas Stallkamp

Baxter International Inc.

One Baxter Parkway

Deerfield, IL 60015

August 5, 2015

Dear Mr. Parkinson and Mr. Stallkamp:

Thank you for meeting with us over the past week at our respective headquarters. As discussed, funds we manage own common stock and stock equivalents equal to nearly 10% of Baxter’s common shares making us the Company’s largest shareholder.

We applaud the important decisions you have made recently to move Baxter forward. Your successful spinoff of Baxalta, which required immense focus and detailed execution, effectively streamlined operations. We were also pleased by your decision to implement a CEO succession plan last month and have confidence that a new leader can build on Mr. Parkinson’s successes while increasing value at Baxter.

However, we are most impressed by your willingness to consider new Directors for the Board to compliment the new CEO. Given Third Point’s significant economic exposure – worth over $2 billion – we discussed nominating our representatives for two Board seats. We have an excellent track record of participating on corporate boards and on CEO search committees in particular, as demonstrated by our role in hiring several stellar, high-performing CEOs. We are well-positioned to help select a new CEO, drive strategy, and provide a thoughtful perspective on capital allocation.¹

We will also bring our significant experience in implementing best practices of corporate governance to this Board. The Company’s staggered Board – exacerbated by an odd voting structure that values shareholders individually rather than according to economic interest – is shareholder unfriendly and archaic. We believe most shareholders agree with our views and as it turns out, so do you. We are confident that by working together, we will ensure shareholders can elect all directors at the 2016 annual meeting, including our representatives.

 

 

1	While serving on Boards, we have been deeply involved in the hiring of John Higgins at Ligand, Marissa Mayer at Yahoo, and Tad Smith at Sotheby’s, among others.

 

1

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We look forward to bringing our experience to the Board and helping to select a new CEO. We believe there are several external candidates with the requisite industry experience, leadership skills, and track record of creating shareholder value who could ably take the reins at Baxter. We are confident the new CEO will benefit from a Board with fresh perspectives and are grateful to you for beginning this productive dialogue with shareholders.

Sincerely,

/s/ Daniel S. Loeb

Daniel S. Loeb

Chief Executive Officer

 

2

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