Baxter Adds Third Point Partner to Board in Pact With Loeb

Baxter International Inc., the maker of hospital supplies, agreed to appoint a representative of top shareholder Third Point to its board, striking a deal to work with the activist investment fund run by Daniel Loeb.

Munib Islam, a Third Point partner, will serve on the board’s executive search working group and its audit committee, Baxter said Wednesday in a statement. Baxter and Third Point will also agree on a second director to be added to the board later.

Third Point sees Baxter as undervalued given its strong global franchise and opportunities to boost profit margins, a person with knowledge of the matter said in August. After spinning off its drug business earlier this year to create Baxalta Inc., the company is at a turning point. The board is looking for a replacement for Chief Executive Officer Robert Parkinson, 64, who announced plans this year to step down after 11 years at the company.

Now that the spinoff is complete, Baxter is in better position to look at more deals, Parkinson has said. The company’s products include infusion pumps, surgical tools, and dialysis systems for kidney disease.

As part of the agreement with Baxter, Third Point will back the board of directors and its recommendations through at least 45 days before nominations are due for the 2017 annual meeting. Baxter agreed to get rid of its staggered terms for directors, which put only a few up for re-election each year, in favor of a system in which all directors face a new vote annually.

Loeb’s firm, which holds a 9.9 percent stake in Baxter, has actively targeted at least two other health-care companies previously -- biotech giant Amgen Inc. and cancer drugmaker Ligand Pharmaceuticals Inc. It has run campaigns for changes at companies as diverse as Dow Chemical Co., Sony Corp., CF Industries Holdings Inc. and Yahoo! Inc.

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