Coverage: Becton Dickinson to buy CR Bard for $24 billion

Medical technology company Becton Dickinson & Co. announced Sunday that it’s acquiring rival C.R. Bard Inc. for $24 billion, another deal in a consolidating industry.

Jonathan Spicer of Reuters had the news:

The companies said both boards of directors approved the “definitive agreement” which values Bard shares at $317.00 each. The shares closed trading Friday at $253.07, just shy of their record high closing price set on Thursday.

There was no early trading in shares of the two companies, according to futures market data on Sunday.

BD, based in Franklin Lakes, New Jersey, said it expects the acquisition of Bard, which is based in the same state and specializes on vascular, urology and oncology products, to boost non-U.S. growth options and to raise per-share earnings in fiscal year 2019. Some $300 million in “pre-tax run-rate cost synergies” are not expected until the following year.

For each Bard share, common shareholders will be entitled to about $222.93 in cash and 0.5077 shares of BD stock, the companies said.

Joseph Walker of Fox Business reports that the deal will improve Becton Dickinson’s market position in medication management and infection prevention:

The deal values C.R. Bard at $317 per share, a 25.2% premium over the company’s share price as of Friday’s close. Bard shareholders will receive about $222.93 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.

“Combining with Bard will accelerate our ability to offer more comprehensive, clinically relevant solutions to customers and patients around the globe,” said Vince Forlenza, Becton Dickinson’s chairman and chief executive officer, in a statement.

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.

Ed Crooks of The Financial Times reports that Becton Dickinson is borrowing heavily for the deal:

The acquisition cost will be paid roughly half in cash and debt, and the other half by issuing new shares. BD plans to borrow $10bn and sell about $4.5bn of equities and equity-linked securities to finance the cash component of the price, and to issue about $8bn in new equity for Bard’s shareholders.

The deal is worth more than half of BD’s market capitalisation, which was $39bn at its closing share price on Friday afternoon.

It is the second large acquisition for BD in three years, following its $12.2bn purchase of CareFusion in 2015.

Announcing the Bard deal on Sunday evening, BD said it would expand its product lines in areas including oncology and surgery, and build on its strengths in infection prevention and medication management.

It added that the acquisition was “financially compelling”, immediately boosting its earnings per share and allowing annual cost savings of $300m per year by 2020.