OR WAIT null SECS
BD and CareFusion announce a definitive agreement under which BD will acquire CareFusion for $58.00 per share in cash and stock, or a total of $12.2 billion, to create a global leader in medication management and patient safety solutions. The agreement has been unanimously approved by the boards of both companies.
The combination of the two companies’ complementary product portfolios will offer integrated medication management solutions and smart devices, from drug preparation in the pharmacy, to dispensing on the hospital floor, administration to the patient, and subsequent monitoring. The combination will improve quality of patient care and reduce healthcare costs by addressing unmet needs in hospitals, hospital pharmacies and alternate sites of care to increase efficiencies, reduce medication administration errors and improve patient and healthcare worker safety. In addition, the company will have solid positions in patient safety to maximize outcomes in infection prevention, respiratory care, and acute-care procedural effectiveness.
Under the terms of the transaction, CareFusion shareholders will receive $49.00 in cash and 0.0777 of a share of BD for each share of CareFusion, or a total of $58.00 per CareFusion share based on BD’s closing price as of Oct. 3, 2014. The transaction is subject to regulatory and CareFusion shareholder approvals and customary closing conditions, and is expected to close in the first half of calendar year 2015. Upon closing, BD shareholders will own approximately 92 percent of the combined company and CareFusion shareholders will own approximately 8 percent.
Vincent A. Forlenza, BD’s chairman, CEO and president, says, “BD’s acquisition of CareFusion allows us to align our highly complementary technologies and products to address unmet needs in the growing $20 billion global medication management industry, which leverages BD’s world-wide infrastructure. It accelerates BD’s transition from a product-focused company to a customer-centric provider of innovative healthcare solutions with leading scale across the medication management value chain and expanded solutions for patient safety. With the targeted cost savings we have identified and the growth opportunities we see in bringing CareFusion products to more patients and healthcare workers around the world, we expect this transaction to create meaningful value for our shareholders, customers, employees and other stakeholders. We’ve long admired CareFusion’s strong franchises and look forward to welcoming their talented team to BD.”
Kieran T. Gallahue, CareFusion chairman and CEO, says, “As part of BD, we see new growth opportunities for our products in global markets, new value we can create for our customers and new opportunities for our employees as part of what will become one of the largest, global leaders in med-tech. The transaction delivers attractive value for CareFusion shareholders, and represents a powerful endorsement of our strong positions in medication management, informatics across our device platforms and leading products to help improve the effectiveness of acute-care procedures.”
The transaction is expected to provide double-digit cash EPS accretion to BD in the first full year, and is also expected to be accretive to GAAP EPS in fiscal year 2018. The transaction is also expected to expand EBITDA margins, and deliver strong cash flow generation and ROIC. The company has identified $250 million of annual pre-tax cost synergies. These savings are expected to be fully realized in fiscal year 2018, resulting from reduced overhead expenses and efficiencies from the combined operational and manufacturing footprint. The estimate excludes any benefit from potential revenue synergies resulting from the combination of the two organizations.
BD has secured $9.1 billion of fully committed bridge financing from Goldman Sachs and expects to put in place permanent financing in the form of available cash and unsecured notes. BD is committed to maintaining a solid investment grade credit rating and its current dividend per share will grow in line with its expectations for long-term earnings, and expects to suspend the share buyback program in the near-term to focus on deleveraging and the dividend. BD also reaffirms its previously announced guidance for fiscal year 2014. CareFusion reaffirms its fiscal year 2015 financial guidance of 5 percent to 7 percent revenue growth and adjusted earnings per share of $2.60 to $2.75.
BD has put in place a detailed execution plan to ensure a seamless integration. A designated integration team, comprised of senior members of both organizations, will be led by BD chief operating officer William A. Kozy. BD is confident in its ability to achieve identified cost synergies as it builds a dynamic organization that brings together two world-class companies and offers opportunities for employees as part of a global leader. CareFusion will operate as part of BD’s medical segment, and BD is committed to maintaining an active presence in San Diego where CareFusion is headquartered.
Goldman, Sachs & Co. served as financial advisor to BD, and Skadden, Arps, Slate, Meagher & Flom LLP provided legal counsel. Perella Weinberg Partners LP and Barclays Plc. served as financial advisors to CareFusion. Wachtell, Lipton, Rosen & Katz served as its legal advisor.
Source: BD and CareFusion