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Becton to Buy C.R. Bard in $24 Billion Medical Manufacturer Deal

April 24, 2017
The $24 billion deal would be the second-biggest health-care transaction of the year so far, behind Johnson & Johnson's agreement to buy Actelion Ltd. for about $30 billion.

Two of the world’s biggest health-care suppliers plan to combine as Becton, Dickinson & Co. (IW 500/101) agreed to buy C.R. Bard Inc. for $24 billion, creating a powerhouse that can offer customers everything from syringes to infection-prevention technology.

Becton, Dickinson agreed to pay $317 a share for Bard in cash and stock, or about 25% more than Bard’s April 21 closing price, the companies said in a statement on Sunday. Both companies’ boards have unanimously agreed to the deal, according to the release.

Medical companies that supply hospitals and doctors are under increasing pressure to consolidate their operations to get prices down, which has led to several deals in the space. With larger portfolios, they can offer hospitals and purchasing groups package deals on products and services that customers are demanding as they themselves merge into larger health systems with centralized operations.

The scale of the companies makes Becton “an indispensable partner for hospitals, and provides it with a distinctive advantage over the long term,” Vijay Kumar, an analyst with Evercore ISI, said in a note to clients. Bard is a “long duration asset and provides visibility” to Becton over the long run, he said.

Bard specializes in minimally invasive devices such as catheters and ports for people with irregular heartbeats, end-stage renal disease and clogged arteries, which Becton says will complement its offerings in intravenous drug delivery systems. The combined companies will also offer products capable of addressing 75% of the “most costly and frequent health-care associated infections.”

Bard will also add to Becton’s scale in the growing categories of oncology and surgery and expand its offerings in areas such as vascular disease, urology, and hernia care, according to the statement. Their combined scale will increase international presence and opportunities; together, the companies will have about $1 billion annual revenue in China, they said in the statement. About $300 million in annual, pretax, run-rate synergies are expected by the 2020 fiscal year, they said.

Bard had $938.8 million in first-quarter sales, the company said Sunday in a statement. Vascular products generated $256.6 million, while its urology and oncology portfolios brought in $237.7 million and $255.5 million, respectively. Becton’s revenues totaled $12.5 billion in the fiscal year ending Sept. 30.

Bard investors will receive $222.93 in cash and 0.5077 shares of Becton, Dickinson stock for each share they own, according to the statement. The acquisition is expected to close in the fall of 2017.

“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 health care providers who are increasingly focused on delivering better outcomes at a lower total cost,” Becton Chief Executive Officer Vince Forlenza said in the statement.

Second-Biggest Deal

In addition to its medical and life sciences segments, Becton plans to create an interventional unit under which the Bard businesses will fall. Tom Polen, currently president of Becton’s medical segment, was appointed president of Becton and will oversee all the company’s operating segments, including the Bard businesses, according to a separate statement. He’ll continue to report to Forlenza.

The $24 billion deal would be the second-biggest health-care transaction of the year so far, according to data compiled by Bloomberg. In January, Johnson & Johnson agreed to buy Actelion Ltd. for about $30 billion. Infant nutrition company Mead Johnson Nutrition Co. agreed to be acquired by Reckitt Benckiser Group Plc in February for $16.6 billion.

Elsewhere in health care, however, dealmaking has been slower. The first quarter of 2017 was down compared to the value of biotechnology and pharmaceutical takeovers in the last two years.

The medical technology industry has undergone a period of consolidation, as companies that supply everything from gauze pads to complex artificial joints try to get costs down by consolidating operations. Abbott Laboratories last year agreed to buy St. Jude Medical Inc., creating a medical device powerhouse. In 2014 Medtronic Plc bought Covidien Plc, adding a wide range of medical products to the complex medical devices it already had.

For Bard investors, it’s been a good year. The company’s stock is up 13% year-to-date. Becton holders have also done well -- the company has enjoyed a 12% rise since the start of the year.

By Anna Edney

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