Becton Dickinson Acquires CareFusion For $12.2 Billion

By Jof Enriquez,
Follow me on Twitter @jofenriq

Marking the latest multi-billion dollar consolidation deal in the healthcare sector, Becton Dickinson (BD) has agreed to merge with fellow medical equipment supplier CareFusion in a deal worth $12.2 billion in cash and stock.

BD will pay $58 for each share of CareFusion in a transaction that is expected to close in the first half of 2015, according to Fox Business. The deal will give BD shareholders a 92 percent ownership stake in the new company, and will result in $250 million in savings by 2018.

CareFusion makes automated dispensing systems and infusion pumps that deliver medications through intravenous catheters and syringes that BD makes. The combined, expanded portfolio of the new company could give it greater pull with the pharmacies and hospitals it supplies, and will expand its geographic reach.

“This is a perfect strategic fit,” Vincent A. Forlenza, BD’s chief executive, told The New York Times. “We’re coming together to improve medication management, primarily in hospitals.”

The merger will create one of the five biggest medical device companies in the world, the NYT noted. The companies said the tie-up will improve patient care, promote safety, reduce medication errors, and lower costs.

“Strategically, the transaction transforms Becton into a medication management enterprise, controlling the delivery of therapy to patients — inside and outside the hospital — from syringes, to hospital dispensing, and drug infusion pumps,” Rick Wise of investment firm Stifel Nicolas said in a Barron’s article.

The merger is the latest in the recent wave of big-time deals among healthcare companies. Notably, medical device maker Medtronic is purchasing Covidien for $43 billion and AbbVie is planning to merge with Shire Plc in a $54 billion transaction. According to Reuters, healthcare deals’ year-to-date activity has reached $346 billion, compared to $212 billion in the same period last year.

Unlike most recent deals, however, the New Jersey-based BD and California-based CareFusion merger is not considered a tax inversion deal, which likely would have had tough regulatory conditions to hurdle. Under inversion deals, U.S. companies relocate abroad to pay lower corporate taxes, a tactic that has drawn rebuke and stricter tax measures from the U.S. government. As a result, companies like Medtronic are restructuring deals to adjust to newly implemented tax rules.