The U.S. trade watchdog has demanded more information from BD and C.R. Bard about their planned $24 billion merger. Officials at the Federal Trade Commission (FTC) need the additional details to complete their assessment of the deal's implications for competition in the medical technology sector.
U.S. antitrust legislation allows the FTC to ask for more information when it has reason to think a takeover will harm competition. Such requests require both companies involved in a pending transaction to provide documents detailing their operations. The number of documents provided by companies can run into the hundreds of thousands.
Despite the challenge of complying with the request and risk the FTC will scuttle the deal, BD and Bard expressed confidence the transaction will close in the fall of 2017 as originally forecast. The confidence is underpinned by a belief that BD and Bard are complementary businesses with minimal areas of overlap. BD and Bard described the overlaps that do exist as “not material to either the strategic or financial rationale of the pending acquisition.”
While BD and Bard sought to downplay the significance of the second request, it is rare for the FTC to demand additional information. In 2015, 2.7% of transactions resulted in a request for more information. The highest proportion of transactions resulting in second requests in recent years came in 2009, when the FTC asked for more information about 4.5% of transactions. The figures are slightly higher for big deals. In 2015, 5% of transactions worth more than $1 billion resulted in second requests.
Most transactions subject to second requests go on to face enforcement actions. Abandonment or blockade of the merger is the most extreme outcome of such actions. The parties involved in other transactions amend the structure of the deal to allay the FTC’s antitrust concerns.
At this stage, the one concrete effect of the request is the resetting of the waiting period imposed by U.S. antitrust laws. The waiting period will end 30 days after BD and Bard substantially comply with the FTC’s request.
The share prices of BD and Bard were unaffected by news of the second request.