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| CareFusion's San Diego, CA, headquarters--Courtesy of CareFusion |
Becton Dickinson ($BDX) plans to finance its acquisition of CareFusion ($CFN) with a $9.1 billion bridge loan, joining the ranks of other med tech outfits which have recently turned to loans for pending M&A deals.
Becton will enlist Goldman Sachs as lead arranger and bookrunner on the 364-day senior unsecured bridge loan, and plans on refinancing the loan by up to $9.1 billion of senior unsecured bonds, Reuters reports. Goldman Sachs will provide $2.75 billion of the bridge loan, and $6.35 billion will come from a wider, as-of-yet unnamed syndication, the companies said in an SEC filing.
The Franklin Lakes, NJ-based company announced its $12.2 billion acquisition of CareFusion on Sunday, and plans to finalize the deal by the end of 2015. Once everything is said and done, Becton shareholders will own approximately 92% of the combined company and CareFusion shareholders will own the remainder, reflecting a 26% premium for investors upon Becton's Oct. 3 closing price, according to the Reuters story.
The deal stands to benefit both companies, as Becton will get its hands on CareFusion's infusion pumps and drug dispensing systems and CareFusion can access a broader global market. Becton boasts 60% of its sales abroad, while 75% of CareFusion's business is in the U.S., The Wall Street Journal reports. The devicemakers also hope to expand their hospital offerings through the deal, countering an increasingly difficult reimbursement environment.
Becton and CareFusion are not the only med tech outfits jumping on the M&A bandwagon and financing deals with a loan. Minneapolis-based Medtronic ($MDT) took out a $16.3 billion, 364-day bridge loan to back its acquisition of Covidien ($COV), and AbbVie ($ABBV) turned to a £13.5 billion ($23.03 billion) loan to finance its deal for Dublin-based Shire ($SHPG). In September, Medtronic considered revising its $42.9 billion deal and using a $13.5 billion loan instead of cash held abroad to finance its acquisition of Covidien due to new U.S. tax rules cracking down on corporate inversions.
In the meantime, med tech M&A continues to grow at a steady clip as companies vie for a piece of a rapidly growing market. M&A deal value in the med tech sector jumped 363% year over year in the first half of 2014 to $30 billion, according to an Evaluate MedTech report released at the annual AdvaMed med tech conference in Chicago.
- here's the SEC filing
- read the Reuters article
- get more from the WSJ (sub. req.)