Becton Dickinson (BD) is paying $24 billion in cash and stock to acquire C. R. Bard to move beyond diabetes care and into peripheral vascular disease, urology, hernia, and cancer treatments, as well as to round out its market-leading medication management portfolio.
"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," said BD chairman and CEO Vince Forlenza, who will become CEO of the combined company when the transaction closes in the fall of 2017.
BD is known for medical supply products used in intravenous drug preparation, dispensing, delivery, and administration. The company says it will further strengthen its medical management line with the addition of Bard's portfolio in fast-growing vascular access segments, which include peripherally inserted central catheters, midlines, and drug delivery ports.
The acquisition of Bard also will enable BD to expand beyond diabetes and into other disease states, such as peripheral vascular disease, urology, hernia, and cancer, and will strengthen BD's leadership in infection control products.
"We have other programs going on, you know, in diabetes care, for example. And when we step back and look at what other conditions those patients have, it falls right on your product line," Forlenza told Bard CEO Tim Ring in a roundtable discussion video released with the merger's announcement.
Ring, who will join the board of the new company, added, "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."
BD will create a third business unit, called BD Interventional, within the combined company, under which Bard businesses will report both operationally and financially.
It's the first megadeal for BD since its $12.2 billion acquisition of CareFusion two years ago. Bard's strong presence in vascular access and surgery will help drive sales of the “highly complementary” CareFusion portfolio outside of the U.S., according to BD and Bard executives.
Both companies are upbeat on emerging markets, and in particular, China, which they believe will generate $1 billion in annual revenue after the merger, the latest in a string of huge transactions of consolidating medtech companies over the last few years.
"We expect that this deal will cause others in the space to take a step back and ask themselves if there is an opportunity to do another large transaction and should we be acting upon it," Forlenza said in an interview with CNBC.
Under the terms of the deal, Bard common shareholders will get approximately $222.93 in cash and 0.5077 shares of BD stock per Bard share, or a total of value of $317.00 per Bard common share based on BD’s closing price on April 21, 2017. Upon completion of the deal, Bard shareholders will own around 15 percent of the combined company. The companies expect some $300 million of estimated annual, pre-tax, run-rate cost synergies by fiscal year 2020.