122 Billion Merger Sends BD CareFusion Shares Soaring

$12.2 Billion Merger Sends BD, CareFusion Shares Soaring

Investors smile on medical-device maker BD's $12.2 billion acquisition of rival CareFusion, boosting both stocks after the deal is announced.

NEW YORK -- Investors Monday smiled on medical-device maker BD's $12.2 billion acquisition of rival CareFusion, boosting both stocks after the deal was announced.

In mid-morning trade, BD, or Becton Dickinson and Co. (IW 500/136), jumped 7.2% to $124.19, while CareFusion bolted 23.1% to $56.84, near the $58-per-share price outlined in the deal.

The deal will bring together BD's businesses, including providing intravenous catheters and the collection and transport of diagnostics specimens, and CareFusion's intravenous infusion systems and respiratory technologies.

The companies said the deal, unveiled Sunday night, should permit savings to hospitals and insurers by enabling a more comprehensive slate of medical products and reducing errors in the administration of medications.

The transaction "allows us to align our highly complementary technologies and products to address unmet needs in the growing $20 billion global medication management industry," said BD chief executive Vincent Forlenza. "It accelerates BD's transition from a product-focused company to a customer-centric provider of innovative healthcare solutions."

Analysts said the deal makes sense in light of pressures in the health-care sector and the availability of cheap financing that suggest "bigger is better," as RBC Capital Markets said in a note.

Strategic benefits include the complementary product offerings and some $250 million in annual savings, analysts said.

RBC said the lack of overlap in products "should not result in any significant (antitrust) concerns."

The deal comes as merger activity remains heavy in the global pharmaceutical industry.

On Friday, medical equipment firm Medtronic announced new financing plans for its $43 billion acquisition of Ireland-based Covidien. The deal is a controversial inversion transaction in which US companies merge with foreign businesses to relocate in a lower tax address.

Other major deals this year have seen companies like Merck (IW 500/31) and GlaxoSmithKline (IW 1000/104) unveil multibillion-dollar divestments of individual business lines as they sharpen their specialties.

Copyright Agence France-Presse, 2014

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