Commentary

Becton Buys Bard In $24 Billion Medical Technology Consolidation

In a fell-swoop deal to expand its product portfolio in “fast growing clinical areas such as peripheral vascular therapy, oncology and bio-surgery,” Becton, Dickinson and Co. is buying C.R. Bard, Inc., which is headquartered just down I-287 in New Jersey, for $24 billion.

The deal, which was announced Sunday night, “will be creating a powerhouse that can offer customers everything from syringes to infection-prevention technology,” writes Anna Edney for Bloomberg Technology.

“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,’” Edney continues.

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BD and Bard will conduct a live conference call and Web cast about the deal this morning at 8:00 a.m. that will be assessable through BD’s and Bard’s Web sites, and available for replay through May 1. 

Bard is located in Murray Hill, N.J., about 35 miles south of BD’s headquarters in Franklin Lakes, N.J. Maxwell Becton and Fairleigh Dickinson founded BD in 1897. Its first sale was an all-glass syringe that sold for $2.50. Before yesterday’s deal, it had about 50,000 employees in 50 countries and $12.48 billion in sales last year.

Charles Russell Bard, an importer of French silks, founded Bard in New York City in 1907 when he also started importing Gomenol, “a European cure-all” that had helped his urinary discomfort from tuberculosis, according to the company’s timeline. It had $3.71 billion in sales in 2016.

“We will be able to partner (with providers) on fundamental treatment processes in a way that no one else can,” BD CEO Vincent Forlenza told Reuters’ Carl O'Donnell and Jonathan Spicer about the new combination.

“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,” he also said. 

“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,” Tim Ring, Bard's chairman and CEO said in a statement. “We also believe that we can expand our access to customers and patients through BD's strategic selling capabilities, and that our fast-growing portfolio in emerging markets can significantly benefit from their well-established international commercial infrastructure.”

Combining forces has become as infectious in the medical supply industry as in has in pharmaceuticals.

“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,” writes Joseph Walker for the Wall Street Journal.

“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.”

And BD itself acquired San Diego-based CareFusion Corp. for $12 billion in a deal that close in March 2015.

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

In a separate announcement last night, BD announced the promotion of Tom Polen, 43, to president of BD, effective immediately. He will oversee all of BD’s operating segments including a new Interventional segment, which will include the Bard businesses when the deal closes. Polen, who had been EVP and president of the BD Medical Segment, will continue to report to BD chairman and CEO Forlenza.

 
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