Shares of Hill-Rom Holdings HRC rallied 4.7% at yesterday’s closing, after it sealed a merger deal with medical device major, Baxter International BAX. The hospital-bed maker finally agreed to be acquired by Baxter for a total equity value of approximately $10.5 billion and a total enterprise value of approximately $12.4 billion, including the assumption of debt.Going by a Bloomberg report, on Jul 27, Baxter made an initial takeover offer price of $9.6 billion or $144 a share, representing a 16.3% premium to Hill-Rom’s closing price of $123.78 on that day. However, this offer was declined by the latter citing it to be “too low”. The article mentioned that Baxter might return with a better offer soon.The final purchase price, representing $156 a share of Hill-Rom per the definitive agreement, implies a 26% premium to Hill-Rom’s closing price of Jul 27.Both the companies’ boards unanimously approved the acquisition. The transaction is expected to close by early 2022 subject to the approval of Hill-Rom shareholders and the fulfillment of customary closing conditions.Strategic Implications in Favor of Hill-RomThe alliance is expected to broaden the presence of the consolidated companies across the care continuum. It will also accelerate and strengthen the combined organization's digital transformation.The product offerings of the combined companies are going to complement each other. The expanded offerings claim to better support the patient in the hospital, at home, and in alternate sites of care, allowing better integration and coordination of healthcare delivery.The combined portfolio in therapeutic delivery, monitoring, blood purification, diagnostics, and communications for patients and caregivers claims to enhance opportunities for truly connected care. This will result in better patient outcomes, improved workflow efficiencies and data-driven insights at minimum healthcare costs. Image Source: Zacks Investment ResearchFurther, Hill-Rom’s international business currently represents approximately one-third of the company’s total 2020 revenues. Upon consolidation, Baxter’s already-established global infrastructure will help Hill-Rom’s international business to expand further.Financial SignificanceBaxter expects the combination to generate $250 million of annual pre-tax cost synergies by the end of the third year of the consolidation. Further, the transaction is expected to be accretive by a low double-digit rate to Baxter's adjusted earnings per sharein the first full year post the deal closure and increasing to more than 20% by the third year.What Made Hill-Rom an Attractive Takeover Target?We note that through the early phase of the pandemic, hospitals around the world significantly expanded their capacity. In 2020, Hill-Rom’s business hugely benefited from the global surge in demand for ICU and Med-Surg bed systems.This apart, at present Hill-Rom is executing well in terms of its newly-initiated long-term growth strategies through fiscal 2022, focusing on the four strategic priorities. In terms of the first priority, to accelerate top-line growth with innovative products and solutions, during the last-reported third quarter of fiscal 2021, the company launched seven new products and is on track to launch 10 new products in the back half of 2021. New product launches are projected to drive growth annually overthenext 2- 3 years.Going by the second key objective of international expansion and driving penetration in emerging markets, Hill-Rom expects top-line emerging market growth to be in mid-single-digit.The third priority area includes strategic M&As to strengthen its portfolio. According to the company, the acquisitions of EXL and Voalte created a durable new source of growth over a multi-year period. The company also expects future M&As to drive double-digit EPS growth and mid-single-digit top-line growth.The last key strategic priority area includes operational execution and strong financial performance. Under the 3-year growth plan, the company projects core revenue growth of approximately 5%, double-digit earnings growth, and significant cash flow generation.All these made Hill-Rom a lucrative investment target for Baxter.Price PerformanceShares of the company have gained 66.8% in a year’s time compared with the industry’s rise of 14.2%.Zacks Rank and Other Key PicksCurrently, Hill-Rom carries a Zacks Rank #2 (Buy).A few other top-ranked stocks from the broader medical space are Envista Holdings Corporation NVST and BellRing Brands, Inc. BRBR, each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.Envista Holdings has an estimated long-term earnings growth rate of 27%.BellRing Brands has an estimated long-term earnings growth rate of 29%. Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative. See Zacks’ Hottest Tech IPOs Now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Baxter International Inc. (BAX): Free Stock Analysis Report HillRom Holdings, Inc. (HRC): Free Stock Analysis Report Envista Holdings Corporation (NVST): Free Stock Analysis Report BellRing Brands, Inc. (BRBR): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research