Becton Dickinson to acquire Bard for $24bn


Financier Worldwide Magazine

June 2017 Issue

In a landmark deal for the US medical devices industry, Becton, Dickinson & Co. agreed to acquire rival firm C R Bard Inc, in a $24bn cash-and-stock deal. The acquisition, announced in late April, will be the largest transaction ever completed by the company when it closes in the autumn of 2017.

Under the terms of the deal, which still require the satisfaction of the customary closing conditions, as well as shareholder approval, Bard’s common stock holders will receive around $222.93 in cash and 0.5077 shares of Becton Dickinson stock, per Bard share held, for a total value of $317 per share, based on Becton’s closing price on 21 April, the last working day before the deal was announced. The price represents a 25 percent premium to Bard’s share price at the time of the transaction. Once the acquisition has been completed, Bard shareholders will own around 15 percent of the newly combined company.

According to Becton, the deal will be financed by the company borrowing around $10bn, selling about $4.5bn worth of equities and equity-linked securities to finance the cash component of the price, and issuing around $8bn in new equity for Bard’s shareholders.

Becton said the merger will expand its focus on the treatment of disease states beyond diabetes, and include treatments for peripheral vascular disease, urology, hernias and cancer. The company also expects the deal to have a considerable impact on its non-US markets, particularly China. It will raise per-share earnings in fiscal year 2019 and generate $300m in annual “pre-tax run-rate cost synergies” by 2020, the company said in a statement.

Vince Forlenza, Becton’s chairman and CEO, said, “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. Our two purpose-driven organisations 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. We expect the transaction to contribute meaningfully to BD’s plans for revenue growth and margin expansion, and generate outstanding value both near- and long-term for shareholders. I am excited to welcome Bard’s talented employees to our strong and dedicated team as we bring together two companies with such complementary capabilities, values and strong reputations for delivering superior results.”

Tim Ring, Bard’s chairman and CEO, said, “We are confident that this 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 Becton’s strategic selling capabilities, and that our fast-growing portfolio in emerging markets can significantly benefit from their well-established international commercial infrastructure. Our two 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.”

Dealmaking in the medical device sector has gathered momentum in recent years. Driven by a number of factors, most notably a widespread slowdown in revenue growth and increased pressure from healthcare payers over treatment costs, dealmaking has become commonplace. In January 2017, Abbott Laboratories acquired rival St. Jude Medical Inc for $25bn, and in 2015 Medtronic Plc acquired Covidien Plc in a deal worth around $49.9bn. Becton, too, has completed a number of deals of late, including the $12.2bn acquisition of CareFusion, a healthcare service business, in 2015.

The deal for Bard will see the combination of two of the world’s biggest healthcare suppliers and will be the 12th acquisition completed by Becton since Mr Forlenza became CEO in 2011. Mr Forlenza’s acquisition strategy has proved popular with investors; the company’s stock price has more than doubled in that time.

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Richard Summerfield

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