Becton Dickinson (NYSE:BDX) has inked an agreement with C. R. Bard (NYSE:BCR) to acquire the medtech company for $317.00 per Bard common share in cash and stock, valuing the deal at $24 billion.
In announcing the deal yesterday, Franklin Lakes, N.J.-based BD said it plans to create a new segment within the company, BD Interventional, to incorporate Bard’s businesses. BD also named Tom Polen as president of BD, effective immediately. Polen, who previously served as the executive VP and president of the company’s medical segment, will oversee the new interventional arm of the company.
Both BD and Bard officials touted the benefits of the proposed merger, though analysts at S&P said they expected to lower BD’s corporate credit rating over the deal. BD’s stock was down more than 4% near the end of trading today, while Bard’s stock was up about 20% amid 1st quarter results that beat analysts’s expections.
“Combining with Bard will accelerate our ability to offer more comprehensive, clinically relevant solutions to customers and patients around the globe, creating a strong partner for healthcare providers who are increasingly focused on delivering better outcomes at a lower total cost,” BD’s chairman & CEO Vince Forlenza said in prepared remarks. “Our 2 purpose-driven organizations are well-aligned strategically, sharing a strong track record of performance and a deep commitment to addressing unmet needs in today’s challenging healthcare environment.”
Forlenza said he expected the transaction to provide a meaningful contribution on both a near- and long-term basis to BD’s plans for revenue growth and margin expansion.
Bard’s chairman & CEO Tim Ring added that he was confident the combination “will deliver meaningful benefits for customers and patients as we see opportunities to leverage BD’s leadership, especially in medication management and infection prevention.” “We also believe that we can expand our access to customers and patients through BD’s strategic selling
“We also believe that we can expand our access to customers and patients through BD’s strategic selling capabilities, and that our fast-growing portfolio in emerging markets can significantly benefit from their well-established international commercial infrastructure,” Ring said. “Our 2 companies share the conviction that a product leadership strategy focused on unmet needs and improved outcomes that provide economic value to the global healthcare system will provide long-term shareholder returns.”
The companies said they intend to build upon Bard’s portfolio of peripherally inserted central catheters, midlines and drug delivery ports, as well as expand their presence in infection prevention.
Not everyone was positive about the deal. S&P Global Ratings said today that it was placing BD on CreditWatch with negative implications. Analysts at the rating agency expect to lower BD’s corporate credit rating one notch to “BBB” once the Bard acquisition closes.
“The proposed transaction strengthens Becton’s market position in medication management and infection prevention, scale, and product diversity, and bolsters the company’s competitive advantage. … In our view, however, these benefits are offset by a considerable weakening of the company’s credit measures,” said S&P’s David Kaplan and Arthur Wong. They noted that the Bard deal comes only 2 years after BD closed on its $12 billion acquisition of CareFusion, marking a period of elevated debt leverage.
According to the merger deal, Bard shareholders are eligible to receive $222.93 in cash and 0.5077 shares of BD stock per Bard share. At closing, Bard shareholders will own 15% of the combined company, according to Bard.
BD plans to use $1.7 billion in available cash to fund the deal, along with $10 billion in new debt and $4.5 billion of equity. Bard shareholders will receive $8 billion of BD common stock.
The deal is expected to close in the fall of this year.
“BD and Bard share a common purpose with highly compatible organizations. We are very proud of the business and culture we have built over 110 years, focused on quality, integrity, innovation and service,” Bard’s vice-chairman, president & COO John Weiland said. “We have long had great respect for BD and find in them a similarly strong, results-oriented culture that prioritizes execution and long-term value creation.”
Also today, Bard announced its 1st quarter financial results, beating estimates on The Street.
The Murray Hill, N.J.–based company posted profits of $178.1 million, or $2.37 per share, on sales of $938.8 million for the 3 months ended March 31, for a bottom-line growth of 53.3% on sales growth of 7.4% compared with the same period last year.
Adjusted to exclude 1-time items, earnings per share were $2.87, ahead of the $2.65 consensus on The Street.
Managing editor Chris Newmarker contributed to this report.