Becton, Dickinson will pay C.R. Bard investors $222.93 per share in cash plus 0.5077 shares of BD for each share they own of C.R. Bard.
It's an attractive deal for BD because it gives it exposure to vascular, urology, oncology, and specialty surgery markets that are growing due to a larger, longer-living, and wealthier global population.
The acquisition should accelerate BD's top- and bottom-line growth because C.R. Bard is growing more quickly (organically) than BD.
In 2016, C.R. Bard's sales increased 9% to $3.7 billion and its adjusted net income increased 12% to $777.3 million. In January, management told investors to expect sales to grow between 4% and 5% this year, and for adjusted EPS to grow to between $11.45 and $11.75, up from $10.29 in 2016.
For perspective, BD's pre-deal guidance for this fiscal year was for revenue to decrease 3.5% to 4% and for adjusted EPS of $9.35 to $9.45, up 9% to 10% versus fiscal 2016.
Once the deal is done, Becton, Dickinson thinks it can deliver revenue and cost synergies of $300 million annually in 2020. C.R. Bard's higher margins have management estimating that the deal will add 3% to gross margin, as well as boost its annual EPS growth into the teens.
C.R. Bard investors will have to decide if those estimates are good enough to convince them to stick around and own BD's shares, especially since BD is taking on $10 billion in debt to finance this deal.