Becton Dickinson to acquire critical care product group from Edwards for $4.2B

Becton Dickinson (BDX) and Edwards Lifesciences (EW) announced a definitive agreement under which BD will acquire Edwards’ Critical Care product group for $4.2B in cash. Under the terms of the transaction, BD will acquire Critical Care for $4.2B in cash. It is expected to be immediately accretive to all key financial measures, including BD’s revenue growth, adjusted gross and operating margins, and adjusted earnings per share. Critical Care’s long-term financial profile is also expected to deliver revenue growth of approximately 6% to 7%, with year-one adjusted gross margin of at least 60% and adjusted operating margins of at least 25% that increase over time. Additional margin expansion and value is expected to be generated from moderate synergies, primarily from cost of goods sold, supply chain efficiencies, and general and administrative expenses through BD Excellence operating system principles, while preserving Critical Care’s commercial and innovation resources. BD expects to fund the all-cash transaction with approximately $1B of cash and $3.2B of new debt. At closing, BD is expected to have net leverage of approximately 3x and expects to de-lever to its 2.5x long-term net leverage target within 12 to 18 months of closing, primarily by deploying its free cash flows to debt repayment. The transaction is expected to close before the end of the calendar year and is subject to customary regulatory reviews and closing conditions. Upon closing, Critical Care will operate as a separate business unit within BD’s Medical segment to align with its smart connected care approach, and it will maintain its presence in Irvine, Calif. Katie Szyman, who has served as corporate vice president of Critical Care since 2015, will lead the new business unit within BD, reporting to Mike Garrison, executive vice president and president of the BD Medical segment.