What You Should Know:
– Becton, Dickinson and Company (BDX: NYSE), a global leader in medical technology, announced today a definitive agreement to acquire Edwards Lifesciences’ (EW: NYSE) Critical Care product group for $4.2 billion in cash.
– The strategic acquisition unlocks new opportunities for value creation and bolsters BD’s portfolio of smart connected care solutions.
Critical Care: A Leader in Advanced Monitoring Solutions
The acquisition of Critical Care bolsters BD’s portfolio of smart connected care solutions. Critical Care is a high-growth innovator with cutting-edge AI algorithms used by millions of patients worldwide. They played a pioneering role in the hemodynamic monitoring category, and their solutions are currently utilized in over 10,000 hospitals globally.
Critical Care’s solutions provide real-time insights into cardiovascular health for critically ill patients, ultimately improving patient outcomes. Their product portfolio includes industry-standard tools like the Swan Ganz pulmonary artery catheter, minimally invasive sensors, and AI-powered monitors.
Transaction Benefits for BD
This acquisition aligns perfectly with BD’s strategic vision outlined in their BD2025 plan. Here’s a breakdown of the key benefits for BD:
- Strong Financial Performance: The acquisition meets BD’s investment criteria for growth, profitability, and returns. It is projected to deliver immediate improvement across key financial metrics, including revenue growth, adjusted gross and operating margins, and adjusted earnings per share. Critical Care’s long-term financial forecast is also promising, with anticipated revenue growth of 6% to 7% and expanding margins in the coming years.
- Strategic Alignment: Critical Care’s focus on advanced monitoring solutions complements BD’s existing offerings, creating opportunities for further innovation and interoperability across various care settings.
- Synergy Potential: BD expects to achieve moderate synergies through cost optimization and leveraging their BD Excellence operating system principles. These synergies will be achieved while preserving Critical Care’s strong commercial and innovation capabilities.
Transaction Details and Timeline
BD plans to fund the all-cash transaction with a combination of existing cash (approximately $1 billion) and new debt issuance ($3.2 billion). Following the acquisition, BD’s net leverage ratio is expected to be around 3x. The company anticipates returning to its long-term target net leverage ratio of 2.5x within 18 months, primarily through the use of free cash flow for debt repayment.
The transaction is anticipated to close by the end of 2024, subject to standard regulatory approvals and closing conditions.
"Critical Care expands BD's portfolio of smart connected care solutions with its growing set of leading monitoring technologies, advanced AI-enabled clinical decision tools and robust innovation pipeline that complement BD's existing technologies serving operating rooms and intensive care units," said Tom Polen, chairman, chief executive officer and president of BD. "We believe the combination unlocks multiple new avenues for growth and value creation through BD's broad global footprint, increased penetration across new and existing hospital customers, new innovation opportunities across data sets and platforms, and application of the BD Excellence operating system. The transaction is expected to be immediately accretive to all key financial measures with a strong return profile, which underscores our continued commitment to generate sustained shareholder value. Critical Care is well aligned to BD's core innovation and business strategies, is a strong cultural fit and we look forward to welcoming Katie and Critical Care's talented team to BD."
