Monday, April 24, 2017
Becton, Dickinson & Co. said Sunday that it would acquire C.R. Bard Inc. for $24 billion, the latest merger of medical-supplies manufacturers.
The deal values C.R. Bard at $317 a share, a 25.2% premium to the company’s share price as of Friday’s close.
Bard shareholders will receive about $222.93 a share in cash and the balance in Becton Dickinson stock, the companies said.
Becton Dickinson, based in Franklin Lakes, N.J., said the deal would improve its market position in medication management and infection prevention by broadening its product portfolio.
Bard, whose products include catheters and implantable heart-devices, had $3.7 billion in sales last year. It is based in Murray Hill, N.J.
The deal would be the latest merger of medical supplies and devices companies looking to increase their product offerings to gain market share among hospitals and physician practices, which have undergone intense consolidation in recent years. Hospitals are increasingly looking to narrow the number of suppliers they use, in part to negotiate better discounts in exchange for purchasing more volume.
Hospital consolidation has been a factor in several recent deals, including the merger of orthopedic-device makers Zimmer Holdings Inc. and Biomet Inc., and Medtronic PLC’s $49.9 billion acquisition of Covidien PLC in 2015.
“Customer consolidation continues in the U.S. marketplace,” said Becton Dickinson Chairman and Chief Executive Vince Forlenza in an interview. “It certainly drove what we were thinking about” when considering the Bard deal, said Mr. Forlenza, who added that there were some 100 hospital mergers last year.
Becton Dickinson has been moving over the past several years to offer more comprehensive solutions to its hospital customers, and acquiring “Bard is a continuation of that,” Mr. Forlenza said. “It builds upon it and broadens it at the same time.”
The transaction is expected to increase Becton Dickinson’s adjusted earnings per share and result in $300 million in annual pretax cost savings by 2020, the companies said. Combined, the companies will have about 67,000 employees, according to their most recent annual reports.
Becton Dickinson will create a new unit called BD Interventional from which Bard’s businesses will operate and report results. The unit will be managed by Tom Polen, who was promoted to president of Becton Dickinson, the company announced separately on Sunday. Mr. Polen, who was previously president of Becton Dickinson’s medical unit, will now oversee all of the company’s operating segments.
Becton Dickinson had $12.5 billion in sales last year, with about 45% of the revenue coming from international markets. The company sells products including syringes and needles to hospitals and physicians as well as diagnostic tools and laboratory supplies used by researchers.
The companies said that Becton Dickinson’s strong international presence would help Bard to expand overseas, where it has 500 registered products. The combined company will have a large footprint in emerging markets, including $1 billion in annual sales in China, they said.
Bard’s international sales rose 11% to $1.2 billion last year and represented nearly a third of the company’s total revenue.
Becton Dickinson said it would use $1.7 billion of available cash to fund the transaction, along with about $10 billion in new debt and about $4.5 billion in equity and other equity-related securities sales. Bard shareholders will also receive $8 billion in Becton Dickinson stock.
The transaction was approved unanimously by the boards of both companies and is expected to close in the fall of 2017.
Becton Dickinson’s Mr. Forlenza said there is “negligible” overlap between the company’s products and he doesn’t expect the deal to create antitrust concerns among regulators.
