[Allegiance Letterhead]


                                                              September 6, 1996

Mr. Thomas Jones and
Mr. David M. Lynn
Mail Stop 7 - 6
450 Fifth Street, N.W. 
The United States Securities and Exchange Commission
Washington, D.C.  20549

       Re: ALLEGIANCE CORPORATION FORM 10 -- SEC FILE NO. 1-11885

Dear Messrs. Jones and Lynn:

As contemplated by Rule 24b-2 under the Securities Exchange Act of 1934, as 
amended, Allegiance Corporation ("Allegiance") respectfully requests 
confidential treatment for this letter of response, its contents and all 
related attachments. Please advise us (by telephone at 847.948.3781) promptly 
if you will be unable to honor this request.

           RESPONSES TO YOUR SEPTEMBER 4, 1996 COMMENT LETTER


COMPANY RESPONSE TO STAFF COMMENT 1

Both this letter, and the August 22, 1996 initial letter of response have 
been submitted in an electronic, non-public format under header submission 
type "CORRESP."

STAFF COMMENT

2. The staff notes the response to comment 11 of the staff's August 9, 1996 
letter. Please supplementally provide the market and management data 
referenced in the response.

COMPANY RESPONSE

The requested materials attached as Appendix A are submitted on a 
confidential basis. According to Owens & Minor's most recent Form 10-K, it 
reported sales in 1995 of $2.976 billion. Allegiance's pro-forma sales were 
$4.571 billion in 1995 (page 35).



Moreover, and as originally indicated in its August 22 letter of response, 
Allegiance management supplementally advises the staff that it believes 
Allegiance is unique in health care because it integrates distribution, 
product manufacturing and a range of cost-management services. It has 
specific competitors in each of these areas, but no single company competes 
with Allegiance in all three. Allegiance is frequently compared with Owens & 
Minor, the second largest distributor of medical and surgical supplies in the 
United States. But Owens & Minor does not distribute laboratory products, nor 
does it manufacture its own product lines or offer as comprehensive a 
portfolio of cost-management services.

As the second page of Appendix A indicates, Allegiance's fluid suction and 
collection products, marketed under the Medi-Vac-Registered Trademark- 
container brand name, are, according to Allegiance management, the 
best-selling of such products. The market for this product category is 
fragmented, but Allegiance's two closest competitors, C.R. Bard and Becton 
Dickinson, are each believed to enjoy less than half the sales Allegiance 
generates for these surgical products.

STAFF COMMENT

3. We note the responses to comment 19 and 20. Disclosure regarding the 
consideration and approval of the distribution by the Baxter Board in 
response to these comments should be provided via pre-effective amendment. We 
may have further comment.

COMPANY RESPONSE

     The following sentence has been added to the end of the first paragraph 
of the section captioned "Opinions of Financial Advisor" on page 17:

"It is expected that the Baxter Board will rely, in part, upon the receipt of 
the below opinions in deciding to formally declare the Distribution dividend."

STAFF COMMENT

4. Reference is made to the second full paragraph on page 29.  The last 
sentence states that, "To the extent that savings do not materialize from 
these efforts, Allegiance will be obligated to reimburse the customer for a 
portion of the shortfall."  Please disclose whether the Company has estimated 
and recorded a liability for its potential obligation under the 
shared-risk/shared-savings programs.

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COMPANY RESPONSE

Savings commitments are reviewed and monitored for the 
shared-risk/shared-savings agreements quarterly.  Based upon current sales 
levels and estimated supply and related cost savings, Allegiance does not 
believe that it currently has any probable obligations under these agreements 
and, therefore, no such liability has been recorded in the financial 
statements.

STAFF COMMENT

5. The staff notes the response to comment 25.  The introduction to the pro 
forma information, and the pro forma information itself, if necessary, should 
be revised to present the Statements of Income as if the transaction was 
consummated as of January 1, 1995.  Please revise.

COMPANY RESPONSE

The introduction has been so revised.

STAFF COMMENT

6. Refer to adjustment (a) on page 36.  Since the proceeds will be used for 
the repayment of approximately $1 billion of intercompany notes, it appears 
to the staff that the intercompany notes should be classified as liabilities 
(i.e. not as part of equity) in the historical financial statements.

COMPANY RESPONSE

The $1 billion of intercompany notes referred to in footnote (a) did not 
exist as a liability of Allegiance as of the June 30, 1996.  The liability is 
the mechanism by which Allegiance will transfer cash to Baxter for the 
retirement of Baxter's third party debt.  Consequently, management believes 
that this transfer of cash to Baxter is appropriately classified as a 
reduction in "Investment by and advances from Baxter International Inc." and 
accurately reflects Allegiance's pro forma equity as $1.4 billion at June 30, 
1996.  We know of no requirement to adjust the historical financial 
statements to reflect this distribution to Baxter.

STAFF COMMENT

7. Refer to adjustment (b) on page 36.  It is unclear to the staff how the 
adjustment of $1,346 million was calculated and why the full amount is 
included in retained earnings.  Please advise or revise.

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COMPANY RESPONSE

After distributing the $1.16 billion to Baxter for the retirement of Baxter's 
third party debt as discussed above, Allegiance's pro forma equity at June 
30, 1996 is $1.4 billion.  Assuming a distribution of approximately 54 
million shares of $1 par value common stock, $54 million was reclassified 
from "Investments by and advances from Baxter International Inc." to "Common 
stock" and the remaining $1,346 was reclassified to retained earnings.  Upon 
reviewing the historical activity of Allegiance, it was determined that the 
Allegiance businesses generated earnings in excess of $1,346 million and, 
therefore, the full amount should be properly classified as retained earnings.

MANAGEMENT'S DISCUSSION AND ANALYSIS, PAGES 38-45

STAFF COMMENT

8. Reference is made to the discussion of Pretax Income on page 41.  Please 
revise the first full paragraph to discuss the first six months of 1996 
instead of only the first quarter of 1996.

COMPANY RESPONSE

The paragraph has been so revised.

STAFF COMMENT

9. Refer to the third full paragraph on page 42.  Please advise the staff 
supplementally in more detail of the Company's basis in GAAP for the possible 
change from Baxter's current undiscounted cash flow methodology to one based 
upon fair value.

COMPANY RESPONSE

Baxter's stated policy is to amortize goodwill on a straight-line basis over 
estimated useful lives not exceeding 40 years.  The recoverability of the 
goodwill is assessed based on the projected undiscounted operating cash flows 
of the related businesses.  As subsidiaries of Baxter, the businesses that 
now comprise Allegiance Corporation, have appropriately followed the 
accounting policies established by Baxter for its consolidated group.  

                                                                              4



Allegiance management believes that the market value of Allegiance, 
subsequent to the Distribution, could be substantially below its book value.  
Since market prices in an active market are generally considered to be an 
objective and relevant measure of an asset's fair value, management is 
evaluating its accounting policy for assessment of recoverability of goodwill 
under Accounting Principles Board Opinion No. 17 (APB 17) to ensure that its 
present policy remains appropriate for Allegiance as a separate, 
publicly-traded company.  APB 17 paragraph 31, as amended by Statement of 
Financial Accounting Standards No. 121 (FASB Statement No. 121), states that:
 
     "Identifiable intangible assets not covered by FASB Statement No. 121, 
     ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED 
     ASSETS TO BE DISPOSED OF, and goodwill not identified with assets 
     subject to an impairment loss should be evaluated as follows.  A company 
     should evaluate the periods of amortization continually to determine 
     whether later events and circumstances warrant revised estimates of 
     useful lives....Estimation of value and future benefits of an intangible 
     asset may indicate that the unamortized cost should be reduced 
     significantly by a charge to net income."

Since Allegiance management believes that its market value (fair value) could 
be substantially less that its book value, the company is considering whether 
recognition and measurement of impairment of its goodwill based upon a fair 
value methodology represents a more preferable method of accounting.

STAFF COMMENT

10. Please provide a signed, currently dated consent from the independent 
auditors in the amendment.

COMPANY RESPONSE

As discussed and agreed in a telephone conference between representatives of 
Price Waterhouse LLP and Mary Farrar of the SEC staff on September 6, 1996, 
no currently dated consent need be provided with this amendment.

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*                  *                   *                   *                  *

As previously discussed with the staff, and as indicated in our August 22 
letter of response, on September 11, 1996, Allegiance management will begin 
road show activities (and, on September 9, 1996, print this revised 
preliminary Information Statement for use in connection therewith). September 
30, 1996 continues to be the scheduled Distribution Date. Also, we expect 
that "when-issued" trading in Allegiance common stock will begin on September 
23, 1996. Accordingly, management respectfully requests an SEC effectiveness 
order related to the Form 10 as of the close of business on September 20, 
1996.

Please feel free to contact Patrick Fitzsimmons, telephone 847.948.3781, or 
in his absence, me at 847.689.6812 with any questions or requests for 
additional information.



                                       Sincerely,

                                       /s/ William L. Feather  
                                       William L. Feather
                                       Senior Vice President
                                       General Counsel and Secretary


Enclosure


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