Baxter may be looking for a Boston home

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Deerfield, Ill.-based Baxter International Inc., which is planning to split its medical devices and biopharmaceutical units into two companies next year, had pledged to keep both firms near the Chicago suburbs.

A report in a Boston business publication throws that pledge into doubt. With news that Baxter is staking out real estate in the Boston area for its headquarters, Illinois faces the prospect of having to dangle tax incentives to keep one of its largest employers from defecting.

The company is looking for 150,000 to 200,000 square feet of space in Cambridge, Mass., the Boston Business Journal reports.

The news is likely to ratchet up discussions with state leaders, who want to keep the roughly 5,400 employees at Baxter's headquarters in Illinois.

A spokesman for the Illinois Department of Commerce and Economic Opportunity said it has not been approached with specific plans to move headquarters, but added that the agency had discussions with Baxter in March, when the company announced plans to split into two firms.

“We agreed to resume the discussions in a few months and are now doing so,” the spokesman, David Roeder, said in an email. “We will work to keep their employees in Illinois."

If Baxter puts forth a specific plan to move, the state agency could become embroiled in a battle of competing tax breaks and other economic incentives with its counterpart in Massachusetts, which would do its best to lure a big biotech firm to its backyard.

A spokeswoman for the Massachusetts Alliance for Economic Development said she had seen the Boston Business Journal's report but declined to comment when asked if her agency had been involved in discussions with Baxter.

A Baxter spokeswoman also declined to comment. "As we stated in March, when we announced plans to create two separate, independent global health care companies, the corporate headquarters of both companies will be located in northern Illinois," she said in an email. "Given Baxter's size and scope, as well as our many partnerships and collaborations, there are often rumors circulating."

The state's Economic Development for a Growing Economy program offers tax credits to companies that are in “active consideration” to move outside Illinois, according to DCEO's website. But to qualify for the tax credits, the company must declare that there is competition with another state.

A tax deal for Baxter certainly wouldn't be unprecedented. Threatened with the departure of Sears Holdings Corp., CME Group Inc. and CBOE Holdings Inc., in 2011, the engineered a $100 million tax break package aimed at keeping the companies in the state. The three stayed.

Baxter posted sales of $15.3 billion in 2013. It has about 61,500 employees in all, according to its website.

The Boston Business Journal reported in May that a biotech company from outside Massachusetts was looking for 150,000 to 200,000 square feet of office space and possibly another 200,000 square feet of research and lab space. The publication yesterday identified the company as Baxter, citing unidentified real estate sources in Boston.