BD has struck a $24 billion deal to buy C.R. Bard. The takeover will strengthen BD’s position in the markets for catheters, pumps and other items while also giving it a bigger presence in fast-growing fields including oncology and biosurgery.
Analysts at Jefferies said the acquisition would create “the undisputed leader in vascular access solutions.” This leadership position will be underpinned by BD’s portfolio of needles, syringes and other medication delivery devices and Bard’s peripherally inserted catheters and ports. BD, also known as Becton Dickinson, sees such breadth and scale strengthening its hand in a consolidating healthcare sector.
“We will be able to partner [with providers] on fundamental treatment processes in a way that no one else can," Becton Dickinson CEO Vincent Forlenza told Reuters.
BD is borrowing heavily to make the deal happen. The med tech company will finance most of the cash portion of the deal with a $10 billion loan and a $4.5 billion sale of equities and other securities. BD will fund another tranche of the takeover by issuing $8 billion in new stock to Bard’s shareholders. To offset the outlay, BD aims to make cost savings of $300 million a year by 2020.
The buyout continues a busy few years for big med tech deals. Since Medtronic completed its $49.9 billion takeover of Covidien early in 2015, BD has bought CareFusion for $12.2 billion, Zimmer has landed Biomet for $14 billion and Abbott has acquired St. Jude Medical in a deal originally valued at $25 billion. If the BD-Bard deal closes as expected later this year, it will move the amount spent in big ticket med tech takeovers in the past few years well past the $100 billion mark. Shares in BD have risen 31% since it closed the CareFusion deal.
Some observers think there is scope and appetite for more big deals. Integra Lifesciences, Intuitive Surgical, Teleflex and Wright Medical have market caps ranging from just north of $1 billion to $30 billion and could come into play if other big med tech companies follow BD’s lead. Forlenza thinks that is a distinct possibility.
“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.